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Seller’s Guide

learn how to make your home show ready

Stage Your Home To Look Its Best While Selling

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Staging or making your home “show ready” helps buyers imagine themselves living in it.

If you want to sell your home faster, staging a house is a tactic home sellers should consider. Staging a house gets your place showroom-ready and allows buyers to imagine themselves living there. Home buyers are used to seeing picture-perfect houses—in person, on home decorating shows, and in online listings, so learning how to stage or make you home “show well” a house can make a big difference when selling.

What does staging a house mean?

Staging a house is the process of strategically arranging furnishings and decor to make a house look its best while selling. This may involve paring down and refreshing your own belongings, or moving all of your own stuff out and renting furniture and decor.

Here’s how to stage a house.

Get rid of clutter.

The most essential task when staging a house involves purging and cleaning—a clean, empty-as-possible house looks bigger. Remove knick-knacks and personal items from all surfaces. Don’t just put them in closets; potential buyers usually look in those, and you want yours to appear roomy. Box up spare belongings and get them out of the house.With the clutter gone, do a deep cleaning. Make your kitchen and bathroom sparkle, and be sure to close the toilet lid before any showings. Air out the entire house by opening the windows—air fresheners or scented candles can trigger allergies, and you don’t want prospective buyers feeling itchy. If you have pets, wash everything they touch—no one likes pet odor. Consider hiring a pro for the deep clean if you have room in your home-selling budget.

Aim for a light and bright look.

Buyers typically like to see bright rooms, so lighting is an essential part of staging a house. Open your blinds or pull your curtains back before a showing. Make sure your light fixtures look appealing. If your lampshades are dingy or your fixtures are dated, consider replacing them. Even dusting your bulbs and fixtures can help let more light through.Play with different color temperatures of lighting as well—the whiter the light, the more it will look like daylight. You can check the Kelvin rating on light bulb boxes to help you choose the right one: soft white is typically 2700K-3000K, and daylight runs between 5000K–6500K.

Stage important rooms first.

We’re about to get into the part of staging that can cost money—renting furniture, or removing some, which can require a storage unit. This can be a considerable cost of selling your house, so if you don’t have the time or money to stage your whole house, you can get the most bang for your buck by staging certain rooms. The main living area is the most crucial space to stage and look appealing to buyers. Next comes the master bedroom, followed by the kitchen. Rooms that are an important in your home should also be considered. Secondary bedrooms are often okay to leave as is but should be tidy and clean.

Remove and/or rent furniture.

A good rule of thumb is to remove about half your furniture. This could be difficult since you may still need to live in the home. But your house will look bigger and more appealing to most buyers with less furniture in it. If your furniture just doesn’t look showroom-ready (or if it’s already moved into your new home), you can rent nice, new pieces. Put your furniture in storage, or sell or donate it if you won’t be taking it with you.

Arrange furniture.

Once you’ve settled on the furniture that will occupy the staged home, position couches, chairs, and tables away from your walls. This is a design technique called “floating” the furniture. Anchor the space with an area rug, even if the room has wall-to-wall carpet. This creates a cozy, intimate space, ideal for chatting with friends and family.

Work on your home’s curb appeal.

“Curb appeal” is a real estate term for how nice your home looks on the outside at first glance. It’s a big deal when staging a house because the exterior is the first thing potential buyers see. Get buyers in the door by doing the following:

  • Power-wash your house and walkways.
  • Clean your windows.
  • Make sure your house number is easy to read.
  • Mow the lawn.
  • Trim overgrown greenery.
  • Plant flowers.
  • Put a welcome mat and potted plants on your front stoop.
  • If you have a porch, include outdoor furniture.

The little extras matter.

Once you’ve learned how to stage a house and yours looks perfect, add some finishing touches inside. People love to see fresh flowers in vases, a bowl of fresh fruit on the kitchen counter, and folded towels in the bathroom. If you’re living in your home while selling, you can keep your nice extras in a closet so they’re ready to go quickly when your real estate agent calls to say a buyer is on the way.Now that you know how to stage a house, you could have your home sold in no time.

Getting you r home ready to sel

How to Get Your House Ready to Sell

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Wondering how to get your house ready to sell? If you’re looking to sell your home during primetime which is during the first six months of the year in South Placer (we’ve got great weather!). Learn more about getting your home ready to sell.

How to get your house ready to sell

Unfortunately, getting a house ready to sell is not as easy as posting an add on Facebook. If you want your home sweet home to stand out from the competition, you need to make it shine. So, here’s how to whip your place into shape by discovering any problems and upgrading the eyesores. Because like it or not, your home has sustained some wear and tear over the years. Here’s how to assess the work you should do and find out which if any updates will pay off to help you sell.

1. Look at the big ticket items in your home, are they old?

No matter how great your home looks at first glance, any savvy buyer will point to various parts and pop the question: How old? And since guesstimates won’t cut it, you will need to gather some paperwork to get your house ready to sell. If you’ve purchased your home in the past few years, check your home records or seller’s disclosure for the age or last repair of big items (namely your roof, HVAC system, water heater, and gutters), or dig up copies of your own maintenance records or receipts.

Pro Tip: How long items last depends on a lot of factors such as the model and how well it’s been maintained, but you can get a general idea of average lifespan. For example:

  • Wood shingle and shake roof: 15 to 30 years
  • Central air-conditioning unit: 15 years
  • Electric water heater: 14 years
  • Gutters: 30 years

2. Do your own walk-through

Be a “buyer” and go through your home, room by room. Look for signs of damage that might drag down its value.  Need inspiration? Think about these types of issues looking at your home:

  • Wood rot around outside door frames, window ledges, and garage doors. Condensation and rain can cause these areas to weaken and rot.
  • Water stains on the ceiling or near doors and windows. This can indicate a leaky roof or rain seeping in from outside.
  • Leaks under sinks or around toilets.
  • Bulges under carpet or discoloration on hardwood floors, which can indicate flooding problems or an uneven foundation.

Next, test what’s called the “liveability” in every room. For example: Cracks visible in the walls and floor, doors that don’t shut right, broken handles on cabinets, basically anything that doesn’t work perfectly should be repaired. And don’t forget to inspect the outside.

3. Bring in the pros to streamline the fixing

Once you’ve done your own walk-through, you may want to have a pro take a second look before you decide you’re ready to sell. These people can spot flaws you overlooked, because either you’re used to them or you didn’t realize they could cause trouble. My recommendation is to get a pre sale inspection for your home. There are companies specializing in a comprehensive home inspection. While your at it get the roof and order a wood pest inspection as well.

Pro Tip: While the cost varies, people pay $300+ for a home inspection. Go to the American Society of Home Inspectors to find an inspector in your area. It may cost a bit, but it will buy you the peace of mind of knowing you’re not in for any surprises down the road. In fact, having a home inspection report handy to show buyers can inspire confidence that they (and you by association) aren’t in for any nasty surprises as you move toward a deal.

4. Decide what needs renovating or not

Once you know what in your house could stand for repairs, it’s time to decide what to fix. Don’t worry, not everything needs to be done before your home is ready to sell. And while you’re probably not thrilled at the idea of renovating a property you’re going to sell, certain fixes will give you an edge over the competition, which means more/better offers. Remember, to think like a buyer when selling your home. Fix what matters and you’ll get better results selling.

But don’t just obsess over the obvious—e.g., your kitchen could stand for new cabinets. After all, many buyers will want to tweak cosmetic details to their own tastes, so you could be throwing money down the drain. Instead, focus on fix-its that are more relevant to living in the home, buyers like to know are in good shape.

Pro Tip: If you are going to make the home shine. A recent study by the National Association of Realtors® found that upgrading hardwood floors reaps an estimated 100% return on investment, essentially paying for itself. Upgrading your insulation can net you a 95% ROI, a new roof a whopping 105%! Because what buyers don’t like to know they’ve got a solid roof over their heads?

ibuyers

Learn More About Getting a Cash Offer for Your Home

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So you want to sell your home quickly? You’ve seen those ads about a cash offer for your home. Need help? Need more information and answers? Let’s explore if an Instant cash offer for your home from the iBuyers buying homes in South Placer makes sense. What are iBuyers? — they are companies that make quick, all-cash offers on homes and close the transactions in days.  

See if a Instant Cash Offer is Your Best Option

The Bottomline of any offer is the money when the house is sold has to be enough for you to move.

When you list your home for sale, the duty of a real estate agent is to represent the interest of the seller. What I am driven to do is to help sellers determine if an iBuyer offer is the best option and way to sell their home. If an iBuyer has the best option for a seller, that’s great. That’s the offer the seller should take, and I can help you decide what the best path is to sell your home.

Learn More about Ibuyer Basics

The problem is that the iBuyer process is a heck of a lot more complicated than it sounds. The first barriers are:

  1. Are iBuyers buying homes in my market?
  2. Are they paying enough money for homes like mine?

I believe sellers need the help of a professional realtor, especially before there is an iBuyer offer on the table. But no one is telling them that. The implication is that they can either go it alone with an iBuyer or use a realtor to sell their home. The way I see it, there is no either/or here. Sellers need professional help to make the right decision.

Why Cliff?

Because not all iBuyer companies are the same. Not all iBuyer offers are the same. Not all iBuyer processes are the same, and not all iBuyer pricing methodologies are the same. Every iBuyer has a different set of standards for the homes it will consider buying, and depending on the condition of the home, its potential popularity among local buyers, the seller’s equity and a number of other factors, the seller could end up leaving tens of thousands of dollars on the table by working with an iBuyer instead of an agent — even taking an agent’s commission into consideration.

Let’s Chat

I can walk you through the options and choices of listing your home or selling it to an iBuyer. I can share the process of how we can work together to meet your goals for selling and sell your home for the most money, and on your terms.

It starts with us connecting and getting together to discuss an Instant Offer and if an Instant Offer is the best way to sell your home. Contact me by text, phone, email or schedule a meeting.

Sell with confidence with pre-sale inspections

Why Pre-Sale Inspections Help Sell Your Home

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Performing pre-sale inspections on your home before you list it for sale can streamline the sales process and help you avoid any unexpected surprises. What most sellers don’t realize is the inspections of the home is the place where more sales fall apart than any other. The pre-sale or pre-listing home inspections will allow you to get a clear picture about the state of your house – including any problems that may derail a sale. You will have a chance to address major issues, and the information you gain from the inspection will be useful in pricing your home. Getting pre-sale inspections can be an important part of negotiating any offers and address any concerns a buyer may have after you are in contract to sell. for. By understanding the condition of your home, discovering any potential issues to sell, and getting most or all of the problems taken care of you increase the chances of having a smooth transaction from contract to close..

Why You Should Get Pre-Listing Home Inspections

Home inspections are generally performed on behalf of a buyer so that the party purchasing the home knows the true condition of the house. There are typically for a home; a wood pest inspection, a roof inspection, and a home inspection. As a seller, you are not required or provide these inspections. But there are several reasons why you should consider performing these pre-listing inspections;

1. Reduce the stress of selling your home.

By getting these home inspections before listing, you can make informed decisions and responses about any buyer concerns that arise during the sale of the home. Performing these inspections gives you essentially a condition report for your home. This is truly helpful in my opinion for selling your home. You now know if there are any issues and you are basically providing the potential buyer that “here is my home, there shouldn’t be any surprises after you make an offer.” This helps eliminate a lot of stress for both seller and buyer surrounding the sale and is especially helpful in any market to help sell the home. It is normal to worry that your home may have some hidden problems that you are not aware of. With these inspections, you will know if any such problems exist and have the opportunity to address them. More importantly you will be able to obtains the costs to address any issues for selling your home and not be held to a contract timeline to address if its something the Buyer wants addressed while in contract. With buyer inspections after you are in contract for sale, you will have to meet the requirements of the sales agreement for close of escrow which is usually based upon no repairs being factored in. Should any buyer requests for repairs arise from their inspections during the contract you will be rushed to respond to. As a Seller you will have to quickly determine the cost to repair, if the repair can be done in a timely matter, then respond to the buyers request, which might mean clearing the issue during escrow or provide a credit at the close of escrow. This for the agents involved is when the contract is most likely to fall out. You can avoid surprises and uncertainty for buyers who are in contract if you have pre sale home inspections available.

2. Help with pricing your home correctly.

The price you set for your home going on market is one of the most critical pieces of the sales process. Priced too high, you will keep buyers away. Priced too low and you will make less money than you could have. But how do you price something when you do not know what it consists of, or what state it is in? With these home inspections, you will have a much better understanding of any negative aspects of the house, and can price accordingly. You may also be able to price the home slightly higher if you discover that there really is nothing wrong or the sell the house is in excellent condition with no major issues since you addressed them prior to being on market.

3. Pre-Listing Home Inspections Can Speed Up The Sales Process

A buyer that knows you have already had the home inspected is going to feel a lot more comfortable making an offer. No one wants to buy a house that has a bunch of hidden issues. With the inspections in hand, you can demonstrate that the home is in great shape and worth the price you have set. And if there are issues, you can be upfront about them and make it clear that the reasonable price of the home reflects the knowledge of those issues. Furthermore, you can negotiate the issues before accepting an offer which can mitigate any buyer requests for repairs and costs for you to address.

4. Allow you to Make Repairs to Help Sell Your Home Faster.

One of the top home selling tips that I recommend to Sellers is to make sure repairs are made to major items in the home. It makes perfect sense because what buyer wants to deal with the problems of someone else when they don’t have to? Buyers complete the purchase more often based upon the condition and care the Seller’s have invested during ownership. Nice well maintained homes sell quickly, ask any agent.

5. Avoid or Minimize the Requests For Repairs.

With a pre-listing inspection, you can avoid such a situation where the carefully considered offer from the buyer may be thrown out the window if the buyer’s inspection discovers any serious issues with your home. Because you have a comprehensive knowledge of the condition of your home you can negotiate the home sold “as-is” in its present condition because the Buyer knows what he is buying before he made the offer. Nothing can be more upsetting than to see the deal you were relying on begin to crumble, and salvaging such a deal can lead to renegotiation that ultimately leave you on the losing end with costs you didn’t plan on to sell you home.

6. Sell Your Home With Confidence.

Buyers are in a difficult position, so it is normal for them to retain a healthy amount of suspicion when considering a home purchase. For most people buying a home is the most money they will ever spend on a single item. A buyer will need to calculate what he or she can afford for the purchase price, as well as how much money will be required to live in the home and keep it in good repair in the future. If the buyer has any thoughts that the home might have hidden problems, the offer he or she makes will reflect that. A pre-listing home inspection can help eliminate much of the doubt about the home. Knowing that the home has already been examined and that there are no problems allows the buyer to make a confident offer.

7. It makes the Sale of Your Home Easier and Less Stressful for Everyone.

When you agree to pre-sale/pre-listing inspections, it allows the sale of your house to be focused on the quality and condition and you have reports and inspections which justify the sales price of your home. Much like a CarFAx for a car, When the agents knows the exact state of the house, it is easier to compare it to other homes that have sold in the area, which leads to a price not subject to things found after. The inspection also makes it easier for the agent to find buyers, because buyers are attracted to homes that have already been inspected and have very little problems. And when it comes to negotiations, there are no unknowns. The price doesn’t need to be lowered very much, if at all, when it reflects that true state of the house.

Keep in mind that even though you have done a pre-sale inspection, the buyer will more than likely want to have their own inspection as well. You should insist on your listing agent attending the home inspection to not only understand what the buyers home inspector says but to make sure the buyer does not exaggerate any of the issues. Buyers are notorious for using a home inspection as a point of renegotiation. Oftentimes buyers will try to negotiate for things that are non issues. The example I always use is the home inspector saying there is 3-5 years left of the roof and the buyer saying a new roof is needed. Having your agent there to hear exactly what is said is important. You are paying your agent a lot of money – make sure they earn it!

Are There Any Disadvantages to a Pre-sale Home Inspection?

In my opinion there are really none. California real estate home sales require sellers to disclose all known problems with their homes. Home inspections removes that concern and liability as a seller. If you are short on money to make major repairs to your home, doing a pre-sale home inspections can allow you to sell the [rop[erty as is with np financial contribution by the Seller for any requested repairs from the buyer. If your thinking of selling your home to one of the iBuyers (Opendoor, Zillow Offers, OfferPad, etc) knowing the condition of your home could help significantly to determine if you should seriously consider the offer or go on market as an “as-is” sale for more money.

Why Not Make Your Sale Easier With Pre-Listing Home Inspections?

There is no requirement that you get a pre-listing home inspections, but there are certainly a lot of advantages to doing so. Every home sale involves working through home issues, costs, and repairs, but you can limit the negative aspects of the process by gathering all the accurate information you can about your home before you list it. With seller’s inspections, you avoid surprises, control the negotiations and make your sale of your home meet your financial needs.

My Offer is accepted

What Happens After Your Offer is Accepted

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You’ve found the right home at the right price. You submitted an offer, and it has been accepted. Now you are “under contract.” What happens next? Your agent that helped you win the home will manage the timeframe for performing the inspections and contingencies to help complete the purchase or advise you the cancel the purchase offer shpi;d there be any deal breakers. Here are the major items in the process from “contract to close” for a successful purchase.

1. Follow up with your lender if purchasing with a loan

Hopefully your lender already knows the offer has been accepted. However, you need to sync up with your lender and make sure the loan contingencies can be completed by the contract timeframe (typically 21 days after an accepted offer for the loan contingency in California). A conversation with your lender should get the ball rolling and make sure any documentation needed for approving your loan is being worked on. The home appraisal is one of the pieces the bank will need for the loan approval. A home appraisal helps determine how much your home is worth. The appraiser is typically chosen by your lender and scheduled by the lender.

2. Get the earnest money to the escrow company, review disclosures/reports

Your agent should be making sure the “earnest money” or deposit is given to the escrow company within 3 days in California after the offer is accepted. Your agent should also be working with the listing agent to get all the disclosures and reports available for the property. The disclosures and reports are key to helping you determine the condition of the home you are buying and useful for helping you further investigate any issues with your future home.

3. Schedule the home inspection

Inspections are highly recommended to help find any underlying issues that may affect the value of your home and how much work it needs. Even if you have a pre sales inspections including the home inspection, you should make time to review the report on the property with your agent.

4. Get Quotes and purchase home insurance

You are required by law to get home insurance when you purchase a home. Escrow will need to have proof of insurance prior to the close of escrow. Don’t let this be a last minute item, if you do it now you will be able to shop around to find the best deals.

Pro Tip: Bundling your home, auto, and other insurance can save you money.

5. Follow up/purchase a home warranty

Home warranties help protect you if large ticket items—like appliances—fail after you have bought the home. If you purchase a home warranty plan before closing, it will be included in your closing costs. Sometimes, the seller will purchase a home warranty plan for the buyer.

6. Completing the purchase

At this point, you will be roughly 14-21 days since you accepted the offer. You should have: be approved for you loan, have a home appraisal, completed any inspections, reviewed disclosures and reports, requested any repairs, and should be ready to either complete the purchase or cancel the contract. Let’s assume everything is a go and you are ready to complete the purchase. You should be working on your move to the new home. In parallel to your actual move, the real estate professionals will be working hard to get the purchase closed. You typically will see the following happening: The seller will usually ask for a release of all contingencies, and your lender will get the loan documents into escrow for signing. The seller will be signing documents to transfer the home to you. You will be signing all documents you need to transfer and purchase the home to you, bring the rest of funds and depositing into escrow that are needed to close. Once everything is done, correct and reviewed by the Escrow company for seller and buyer, the house will released for recording and transferred to you as the new owner by the escrow and title company

7. After closing

You should be transferring utilities as soon as possible into your name for the new home. Security is a big concern so you should be rekeying the home and looking ar home security and automation options as well. This is also a good time to find contractors for any work you may need or want. Hiring a maid service, pool service, and lawn service is also done after you move.

Pro Tip: Ask the Seller who they use to work on the house while they owned it. It’s often a good idea to retain the home pros that worked on the home and learn more about how and what maintenance is being done. The listing agent is often a good resource to ask if you are looking for recommendations as well.

Learm more about CA Proposition 19 Property Tax Reassessment

Learn More About CA Proposition 19: Property Tax Transfer

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CA Proposition 19 Property Tax Exemptions from Reassessment

Summary

New Rules on Tax Basis Portability

With the passage of Proposition 19, a homeowner who is over 55 years of age, severely disabled or whose home has been substantially damaged by wildfire or natural disaster may transfer the taxable value of their primary residence to:

  • A replacement primary residence
  • Anywhere in the state
  • Regardless of the value of the replacement primary residence (with adjustments if “greater” in value)
  • Within two years of the sale
  • Up to three times (but without limitation for those whose houses were destroyed by fire)

Proposition 19 will supersede the old rules which limited this exemption to the sale and purchase of a principal residence within the same county (Proposition 60) or between certain counties (Proposition 90) — but only if the replacement property was of “equal or lesser value” and only one time.

Learn More

Purchases and Sales Before April 1, 2021

It’s unclear that the tax benefits under Proposition 19 apply to transactions where either the  sale or purchase of a primary residence takes place before April 1, 2021.  

Nonetheless, owners of real property that qualify under Proposition 60 or 90 can still take advantage of those features until April 1, 2021. (If you as an owner never took advantage of these and were qualified, you might be able to get a refund of taxes already paid).   

New Rules on Intergenerational Family Transfers and Family Farms

Proposition 19 also changes the rules on exemptions from reassessment for intergenerational transfers by limiting the exemption to the transfer of a primary residence to a child (or grandchild) only when the property continues to be used as a family home by the child (or grandchild), and even then, if the divergence between the taxable value and the actual value is too great, a partial increase in the new taxable value will be imposed. Proposition 19 also includes provisions that would allow the transfer of a family farm to retain its taxable value.  These new rules apply to any purchase or transfer beginning February 16, 2021.

Questions and Answers

Question 1. What are the most significant changes made by Proposition 19 regarding the transfer of the taxable value of a principal residence?


Answer. Proposition 19 makes three significant changes to the portability of one’s tax basis from the sale of a principal residence to a replacement principal residence.

First, it allows a seller of a principal residence to transfer the tax basis of that principal residence to the purchase of a replacement principal residence anywhere in the State of California.  Under prior law, the seller was limited to transfers either within the same county (under Proposition 60) or between a limited number of counties that specifically permitted such taxable value transfers (under Proposition 90).

Second, it allows the transfer of the tax basis of the sold principal residence to the replacement principal residence regardless of value with certain adjustments to the tax basis if the replacement principal property is of “greater value” than the sold principal residence. Under prior law, only transfers of “equal or lesser value” were eligible for the exemption.

And third, Proposition 19 permits such transfers up to three times (but unlimited for those whose homes were destroyed or substantially damaged by fire). Prior law allowed such transfers only one time.

Question.  Can a seller under Proposition 19 of a principal residence transfer the tax basis of the sold principal residence to the purchase of a principal residence anywhere in the State?

Answer. Yes. 

Question . Can the replacement property can be of greater value?

Answer. Yes, Proposition 19 allows the transfer of the existing taxable value of a primary residence to any primary residence “of greater value.”  

Greater Value is defined as: The replacement residence is of greater value.  The taxable value of the replacement primary residence is calculated by adding the difference between the full cash value of the original primary residence and the full cash value of the replacement primary residence to the taxable value of the original primary residence.

Ex:        Original Primary Residence (OPR) taxable value . . .             $400,000

             OPR sold for      . . . . . . . . . . . . . . .                                              $900,000

             Replacement Primary Residence

(RPP) purchase . . . . . . . . . . . . . . .                                                        $1,000,000

Difference between sale price of OPR

and purchase price of RPP is . . . . . .                                                     $100,000

Taxable Value of RPP is $400,000 plus $100,000…                         $500,000

Question.  Who does Proposition 19 apply to?

Answer. Proposition 19 applies to a seller of a principal residence who is over 55, severely disabled, or whose home has been substantially damaged by wildfires or other natural disasters.

While Proposition 19 states that it applies to persons who are over 55 years of age,  Revenue and Taxation Code Sec. 69.5 defines this to include those who are 55 years of age or older. It is this definition that will likely determine eligibility.

Question. Who qualifies as “severely disabled?”

Answer. Any person who has a physical disability or impairment, whether from birth or by reason of accident or disease, that results in a functional limitation as to employment or substantially limits one or more major life activities of that person, per California Revenue and Tax Code Sec. 74.3.  While there is no definition within Proposition 19, the meaning of this phrase is likely the same as contained in the California Revenue and Tax Code.

Question. How many times can a qualified homeowner take advantage of this tax basis transfer?

Answer. Proposition 19 allows both those over 55 and the severely disabled to use this exemption up to three times.

Question. How often can homeowners who are victims of wildfires or other natural disasters use this exemption?

Answer. Proposition 19 does not limit the number of times homeowners, who have had their principal residence substantially damaged due to a qualifying wildfire or other natural disaster, may transfer their tax basis whenever such event occurs.

Question. When does this portion of Proposition 19 go into effect?

Answer. Beginning April 1, 2021, Proposition 19 applies to the transfer of one’s tax basis anywhere in the State of California regardless of value.

Question. I’m over the age of 55 and want to sell my home now. Under Proposition 19 do I need to wait until April 1, 2021, to purchase another home? How long can I wait?

Answer: Current law prior to Proposition 19 states that the purchase of a new home must be made within two years of the sale of the old one. If you have already transferred your property tax base once, you will be ineligible to do so again until after April 1, 2021. While this question is ultimately an issue that will have to be worked out in the implementation process we believe that as long as either the sale of an existing home or the purchase of a new one occurs after April 1, 2021 that the transaction will be eligible for the tax benefits under Proposition 19 as long as both transactions were completed within two years.

If you wish to obtain the tax benefits of Proposition 19 for a transaction that closes prior to April 1, 2021, whether it is buying or selling a property, you should seek the advice of a qualified California real estate attorney or tax advisor. 

Question. Can a replacement property be purchased prior to the original primary residence being sold?

Answer. Yes. This is how the current rule under Proposition 60 operates, and Proposition 19 uses nearly identical language.

Intergenerational Family Transfers

NOTE:  This is only a guideline from the California Association of Realtors. You should seek or consult with a qualified estate planning or real estate attorney to see how intergenerational family transfer apply in your situation.

Questions and Answers

Question.  If I pass my principal residence on to my children or grandchildren, will the property be reassessed?

Answer. So long as the property continues to be used as a Family Home (primary residence), and the transferee claims the homeowner exemption, the property tax basis will remain the same, subject to some upward adjustments if the property value, at the time of transfer, is more than $1M over the original tax basis.

Question. If the property is transferred to a child or grandchild and used as a Family Home, what will the new tax basis be if at the time of transfer the property value is less than $1M over the original tax basis?

Answer. The new tax basis will remain the same as the original tax basis.

For example, if the original tax basis was, let’s say, $500,000, and at the time of transfer the property is valued at $1.2 M, then the tax basis will remain at $500,000. This is because $1.2M is not more than $1M over the original taxable basis. 

Question. If the property is transferred to a child or grandchild and used as a Family Home, what will the new tax basis be if the at the time of transfer the property value is more than $1M over the original tax basis?

Answer. If the property at the time of transfer is more than $1M over the original tax basis then the new tax basis will be the value of the property at the time of transfer minus $1M.

For example, if the original tax basis was, let’s say, $500,000, and at the time of transfer the property is valued at $2M then the new taxable value will be $1,000,000 ($2M minus $1M). You use this formula because the value of the property at time of transfer was more than $1M over the taxable basis.

Question. Are Family Farms included in Proposition 19?

Answer. Yes, Family Farms have the same exemptions as Family Homes (principal residences).  “Family Farm” means any real property under cultivation or which is being used for pasture, or grazing, or that is used to produce any agricultural commodity. It does not require the transferee to live in the property as a principal residence.

Question. When do these family transfer rules take effect?

Answer. The family transfer rules take effect February 16, 2021. The transferee would have to claim the homeowner’s or disabled veteran’s exemption within one year of the transfer to obtain the benefit of the family transfer tax exemption. 

Question. Intergenerational transfers previously exempted not only the transfer of the tax basis of a primary residence but also up to $1 million dollars of all other real property. Is that exemption still available under Prop 19?

Answer. No. Prop 19 allows only the intergenerational transfer exemption only for the primary residence and only if it continues to be used as a primary residence.

 

Final Thoughts

This article is  intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Readers who require specific advice should consult an attorney.   

Planning to rent? Tips on renting in the new normal

Renting After Selling? Things To Consider

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Renting After Selling? Things to consider and realities for renting

When I talk to clients selling, renting is typically thought of as a viable option. “If nothing else, I can always rent,” I often hear many sellers say this, only to be sticker-shocked and frustrated when the available choices are underwhelming and cost more than what they wanted to spend. 

Let’s take a look at the other challenges about renting a home in today’s market.  Here are things you need to consider when choosing renting as a temporary solution for housing once you sell.

Renting costs are high

It’s going to be more expensive than you think.  When home prices are high so are the price for rentals as well. The demand for housing extends for rentals as well. My advice is for go to Zillow.com and look at the current rental costs.

Find A Rental May Take Time

Finding a rental property may not be as easy as you think. Not everything you see online is really available. This is especially true with rental websites, where you’ll likely see something marked as available — when, in fact, it was rented out several weeks ago.

Then when you find something it may be too late to rent it.  That’s because applications may have been submitted, and the owners might be in the process of evaluating them. Or maybe they’re waiting on a renter to submit a deposit.

Move-In or Turnkey Might Not Be An Option

Do not expect move-in ready.  “It’s a rental.” Most rentals are not in the condition most of us want or expect. Many rentals are really in need of new flooring, paint, appliances and bathroom and kitchen remodeling or at least substantial updates. Most rentals will be rented “as-is” and you shouldn’t expect anything to be replaced or addressed prior to move-in.

Viewing Rentals Are Challenging

Even if you can find a rental getting in to see it might be problematic. If the rental is occupied, you may have to wait 24-48 hours to see it. The rental may not look its best when you do. The tenants might be packing, and condition of the rental might be not what you expect. You also need to ask the Landlord for what will be done to make it ready for the next renter. The time to get the place ready could be a problem if you need to move quickly.

Multiple Applications

The rental market is much like buying a home with multiple offers, be prepared for being one of many multiple rental applications for the prospective rental. Just like homes for sale, the rentals that are in the best locations, are the best condition, have a yard, a view and/or ample parking space will go super-fast.

Be ready and be prepared to fill out a complete application and supply all requested information down to the last detail. Incomplete applications or pieces of information that cannot be verified on your application may cause it to get passed over for one that is 100 percent complete.

In addition to a rental application, you’ll need to supply a copy of your driver’s license (or other official photo identification), agree to a credit and criminal background checks, and provide two to three months’ proof of income or bank statements.

If you are self-employed or working as independent contractor, you should have a statement prepared about how your income is derived. 

There is typically an application fee per applicant as well as a fee for running a credit report and possibly a lease preparation fee.

Also, each landlord or property management company will have their requirements with respect to a security deposit, and some may want the first and last month’s rent.

Rentals That Allow Pets

No matter what kind of pet you have and have happily co-existed with over the years, what you think isn’t an issue might be a big deal to a landlord. Do not assume that every landlord will accept pets, and if they do, there are often restrictions on what they will agree to take.

Large dogs, cats and pets that fall outside the scope of normal household animals may simply not be allowed.  

As renters, you are not in control of these decisions, and the landlord will often require a significant pet deposit for bringing in a furry friend. 

In addition, many communities, particularly condominium and townhomes have restrictions on the size, kind and number of pets allowed. If a landlord will work with your pets, you most likely will have to pay a hefty — and often nonrefundable — pet deposit. They might also have to provide a photo of the pet along with an immunization record.

Pets are often a challenging part of finding a rental and usually a very expensive add on cost for renting a home.

What Appliances Are Included

Double check the appliances that are provided with the rental. Not all rentals come with a refrigerator, or a washer and dryer.  If you  are selling your home and have included those appliances with the sale, you might end up having to buy or rent those items — even though they may not potentially work in the next home you plan to buy.

Working With The Landlord

When you have an issue with the rental, who do you call? Most people don’t think twice about this when submitting an application for rent. However, it’s important to understand whether the property is managed by an owner or a property manager. You should ask and know who to contact when something on the property needs attention.

As potential renters you should ask before renting: Is the owner local or out of the area? What kind of response time can you expect from them or the property manager? Will you be authorized to take care of repairs directly up to a certain amount and ask for reimbursement or?

Understand The Lease

The lease is a contract — just like a real estate purchase agreement — to buy or to sell property. You should fully understand what the terms and conditions of the lease are especially in terms of notice and costs for terminating the lease before it expires.

If the intent to lease a home was to use this time to shop for a home or decide if the area is right for you, you should keep in mind that if you find something you want to buy or move, it might not be as simple as notifying their landlord that you want to move out.

Leases typically spell out the costs of breaking the term — you just don’t get out of them for free. They could also prevent you from being able to sublease to someone else unless you’ve negotiated it as a condition of the lease.

A landlord could enforce your ability to continue to pay on the lease until it runs out if they choose to, so proceed carefully. You also need to be aware that the lease you sign will tend to be more in favor of the landlord. It’ll have all sorts of rules, regulations and requirements tenants are expected to abide by.

Don’t anticipate or plan on being able to negotiate or amend the lease. In a competitive rental market, the landlord is often wanting a long-term lease to minimize the cost of having to prepare the property in between tenants or missing rental income. Make sure you understand the implication and possible additional costs for a short-term lease if they are available.

Understand the other costs in the lease like late fees or utilities that are included. There is typically a late fee is for not paying rent on time, and the landlord or property manager could report this to the credit bureaus. Also inquire whether sewer, water, gas, and electricity are included or not.

Need Help? Just Ask

While renting may seem like a viable option, and market dynamics may dictate that necessity, there will be a substantial amount of planning and logistics involved to secure a rental. It’s important for you to stay flexible in order to find what will be best for what your short-term housing goals are.

I’m more than happy to discuss and share with you the short-term rental market is in the area. I’m also willing to share with you a good property manager or management company you can work with. Much like an agent a good property manager who understands your needs can go a long way to making a short term housing need a reality.