San Antonio's Rockstar Turned Realtor®

This post originally appeared on www.RErockstar.com on May 26, 2010.

Do you have to tell the buyer?

Death is a topic that most people don’t want to talk about in general and in real estate, it’s no different. I’ve been asked a few times about the details regarding death and disclosure in the state of Texas (more specifically, in San Antonio) when buying and selling a home. Questions such as; “This home seems cheap for this neighborhood, did someone die here?,” “It says ‘estate sale‘, does that mean that grandma died in the house?,” or “Do you know how they died?” are common, especially if there’s some indication of death, such as an estate sale.

The Texas Property Code covers this in Section 5.008(c):

Section 5.008(c) A seller or seller’s agent shall have no duty to make a disclosure or release information related to whether a death by natural causes, suicide, or accident unrelated to the condition of the property occurred on the property or whether a previous occupant had, may have had, has, or may have AIDS, HIV related illnesses, or HIV infection.

When a seller (or someone else) dies on or in a property, there is no requirement to disclose – as long as the death is related to natural causes, suicide, or unrelated to the property’s condition (if it is related to the condition of the property, you should be disclosing the defect, regardless of the death). However, the Texas Property Code does not mention homicide (murder), and this becomes a gray area that is often discussed in real estate law circles.

Disclose, disclose, disclose.

It is my opinion that disclosure is the best course of action when it comes to death. I am not an attorney and therefore can only tell sellers and buyers in San Antonio what the Texas Property Code states (and refer them to a real estate attorney who specializes in these issues), but when in doubt – disclose. I’ve never heard of a case where a seller runs into trouble because they’ve disclosed too much.

My view is that you’re better off disclosing the death now, before your neighbors do. Neighbors like to talk and tell potential buyers info they know about a home. No one wants to be surprised by the news of a death on the property, so if you disclose it up front, you eliminate that potential awkward situation when the buyer comes back to you and says “I hear someone died on the property.”

If you’ve experienced a death in your home or on your property and you wish to not disclose the fact to your agent or any potential buyers, I suggest you speak with a qualified real estate attorney beforehand to be sure you don’t run afoul of any laws.

photo courtesy of astimewise

3.8% Real Estate Sales Tax - True or False?

You may have received an email or heard something on Twitter about the 3.8% real estate sales tax that has recently been brought up as an issue with the Health Care Bill (HR 3200).  In the emails, the tax is railed against and brought up as an absolute for all Americans selling their homes.

But wait...maybe we should dig further.  Is it true?  Is it kind of true?  Is it blatantly false?  Does it lie somewhere in between?  Seems this is just another case of email first, tell the truth later.

There is indeed a 3.8% tax in the Health Care Bill.  It, however, is incorrectly labeled as a sales tax.  It is called a Medicare tax in the legislation and I know we're splitting hairs here, but I think it's important to mention as the use of specific words like this are calculated and planned by people to manipulate people's emotions.

This tax however, does not single out real estate, rather it is a tax on investment income.  The key to everything is how the numbers are calculated on whether or not the tax applies to you.  The 3.8% Medicare tax is designed to only affect so-called "high earners" and not everyone will pay the tax upon the sale of their home.

The Tax Facts

• There is a new 3.8% tax in the bill.
• It is not a "sales tax" on all real estate transactions.
• It is a Medicare tax.
• Many people will not have to pay this tax.
• It is going to affect so-called "high earners."
• It is not going affect many people.
• The tax comes into effect in 2013.

"High Earners" - Who are they?

The income requirement for so-called "high earners" are spelled out in the new law: $250,000 for married couples filed jointly, $125,000 for couples filing separately, and $200,000 for all others.  If you earn more than these benchmarks, you are a "high earner" and therefor subject to the new 3.8% tax, but what you are taxed on helps further eliminate many people.

How is the tax calculated?

One of the emails I've seen states that on the sale of a $400,000 home, you would pay $15,200 as a real estate sales tax (3.8% x $400,000).  This is incorrect.  There are two incorrect assumptions by the authors of the email; a) that the Medicare tax is based off of sales price alone and b) it applies to everyone (which we know to be false based on the "high earner" income requirement).

The incorrect assumption that the real estate sales tax (aka the Medicare tax) is calculated based on the sales price of the home makes a huge difference.  Instead, the tax is calculated based on profit.  As investment income, the profit is the sale price minus the initial investment.  Going back to the $400,000 home mentioned earlier, let's assume you paid $350,000 for it.  You profited $50,000.  Based on that, your tax would be $1,900 (3.8% x $50,000).  Much better than $15,200, right?

But wait, there's one more piece of the puzzle.

Okay, so you owe $1,900, which isn't that bad in the overall scheme of things.  But wait...do you owe $1,900?  The answer is a resounding no.  Why?  Because of the capital gains threshold that is included in the language.  You are only charged the 3.8% Medicare tax if your investment income passes the capital gains threshold.  How much is that?  The capital gains threshold is $250,000 for individuals and $500,000 for married couples filing jointly.

This means that profit over the $500,000 or $250,000 (depending on your marital status) would be taxed at the 3.8% rate (you would still need to be classified a "high earner").  In our $400,000 example above, where you walked away with $50,000 in profit, you would not be taxed.  The $50,000 is below the capital gains threshold.

Want to see more examples with calculations?  Visit "3.8% “Real Estate Sales Tax” thanks to Health Care Legislation?"

Although this topic has political implications, the intent of the post is not to debate opinions about the health care bill, taxes, or politics in general.  No matter what you believe politically, the post is designed to inform - not to debate, attack, or throw mud at those that don't agree with you.  I ask that all visitors respect that on my blog.  There are plenty of political forums where that is acceptable and I encourage you to visit them if you wish to discuss such matters.  Thanks in advance - Matt

photo courtesy of Listener42

photo courtesy of Casey Serin

For Sale By Owner - Is it a good thing?

I recently spoke with an online friend of mine at Twitter and learned they were selling their house as a "For Sale By Owner" (or FSBO as they are often called in real estate circles).  I didn't know they were selling their home, but we had spoken a bit about their future purchase.  I learned that they were selling it as a FSBO only after a tweet caught my attention.

It seems a buyer's agent had stopped by their house and knocked on their door.  The agent had an interested buyer and wanted to know if they'd be willing to pay the agent 3% as a commission.  Based on what my friend said, it sounded like the agent demanded they pay it more than asked if they would.  Of course, this alarmed me a bit as I hate to see any sort of high pressure sales and know that many Realtors® have a certain disdain for "For Sale By Owner" properties.

No one should be totally surprised that agents don't like "For Sale By Owner" signs.  Why should we like them?  Much like McDonald's probably hates when you have a backyard BBQ, agents are out there to be in business of helping people buy and sell real estate.  If everyone went the route of "For Sale By Owner," we'd be out looking for new careers.

Why FSBO?

Of course, the idea behind a "For Sale By Owner" is control and money.  Not having to pay a commission to a listing agent and being able to run the sale "your way" are the key factors in why people choose to sell by themselves.  Perhaps someone had a bad experience with a Realtor®.  Perhaps they know a bit about real estate themselves.  Whatever the reason, there will always be people who choose to go it alone.

The control issue is obvious.  We as agents do like to tell you what to do.  We ask you to clean up, we have you rearrange some furniture, we suggest prices, and give advice on the offers that are made.  That's what you pay us to do.  In the end, we sell your home and collect our commission (and pay the buyer's agent's commission out of that).

Commissions are probably the biggest issue to a "For Sale By Owner" - saving money is the name of the game.  By eliminating the commissions, the seller is in control of all the proceeds to their home.  Everyone likes to save money and make more of it.  Who can blame someone for that?

Why not FSBO?

Of course, there is always another side to the story.  Your average "For Sale By Owner" will see this in a different light, but I think there are some important disadvantages to selling a home on your own.

Access - Do you know who's coming and going in your home?  You definitely should.  Being present for all showings might solve this problem, but of course, it also presents some other issues (most buyers are uncomfortable with a seller hanging around).  Here in San Antonio, we use Centralized Showing Service to schedule showings (so we have a record of who's been in and out) as well as Suprakey Lockboxes (which keep records as well).  By utilizing these two items, we know who's been in your home in case there's any problems.  These two items also give you the freedom of not having to be there for every showing.

Trying to schedule showings yourself?  Of course you can do this.  What I have learned though is that if you're not available when the buyer is ready to look, they will often move on and go look elsewhere.  It happens to us as agents as well.  If a buyer calls us and wants to go now, but we're not available, they will often call another agent and see if they're available (of course, if they are our clients, we make the time and schedule it).  One missed phone call or denied showing can cost you the sale of your home (and that applies to "For Sale By Owner" and agent-based sales).

Price - This one concerns me the most as I fear many FSBOs under- or over-value their homes.  Since Texas is a non-disclosure state, sales data is not public.  This is what we base our comparative market analysis on as agents.  We have access to the sales data, but the public does not.  Many sellers will use sites like Trulia and Zillow to do their own market analysis, but these sites do not show a true picture of what's happening in your neighborhood.  I am not against these sites at all.  I use them all the time.  What I am against is using them as the final word in real estate.  Both function as great starting points.

When a buyer sees your "For Sale By Owner" signs, a certain mentality takes over as well.  The buyer knows that fair market value also includes the cost of commissions, so in their minds, they can discount your list price by the cost of a commission.  They see you as a "deal."  In doing so, they might even slash the price (in their offer) by more than the cost of a commission - effectively reducing the amount of money you might have made on the sale of your home.  You don't have to take their offer, of course, but the fact remains that the buyers out there are looking for a deal.

The exact opposite can happen as well - the FSBO seller can over-value their home.  Agents do it too (it drives some of us nuts when we see agents doing it).  When a home is listed too high, it often languishes on the market.  Time spent on the market drives up the cost of the sale.  Every time you make another mortgage payment, you are lessening the value of the sale.  Mortgage interest is not recaptured upon sale, only principal reductions are.  If you've been in the home a short time and are still paying the weight of your monthly as interest, then you are not getting much value out of each payment.

Exposure - "For Sale By Owners" used to get little more than a sign in their front yard for exposure.  Times are different now and the internet has helped level that playing field.  FSBOs now have access to many of the same tools that we have, in some cases, even the local MLS.  This is the hardest argument to make to a seller who wishes to go it alone.  If you are doing it yourself, do yourself a favor and get on your local MLS - as much as I dislike the loopholes that allow a "For Sale By Owner" access to an MLS that my dues pay for (and I pay heavily for), they do exist.  Being on the MLS is a huge benefit.  Not only does it get you searchable within our system; it gets you on Realtor.com and allows you to be shown on thousands of individual agents' websites through the power of IDX.

Exposure isn't just about slapping some photos on a website though.  Many of us practice SEO (Search Engine Optimization) techniques on a daily basis in order to get our listings and sites to be ranked higher up in the search engines (such as Google).  By working at it everyday we're able to get more exposure than a website that was thrown together and forgotten.  Agents also talk about their listings to other agents all the time - sometimes word of mouth is better than anything else.

The legal stuff - Let's face it, selling your home is a legal process.  The forms we use are written by lawyers for a reason - to protect the parties involved and give them legal remedies should a problem arise.  Although the One To Four Family Residential Contract Realtors® use here in Texas is pretty simple to fill out, it's the words that we don't write that matter most.  The wording has been tested in the court of law over and over again and refined (we often get updates on the forms several times throughout a year).

The Texas Real Estate Commission maintains the Real Estate Recovery Trust Account (FAQ - pdf file) for consumer's protection when a real estate transaction comes down to lawsuits.  Every real estate licensee pays into this fund and when we are sued, the fund is there to take care of the costs of the judgment.  If you are selling your home as a "For Sale By Owner," guess who's responsible for paying the judgment if you lose the case?  That's right - you, the seller.  Real estate agents also carry E&O insurance (Errors and Omissions Insurance) that helps protect us in the event of judgments.  We're covering your legal bases and ours.  You're covering all of them on your own.  Imagine trying to save a few thousand dollars and suddenly you're paying out a judgment of tens (or hundreds) of thousands.

This part probably worries the most when it comes to "For Sale By Owners."  Most people only see the easy part of filling out that form - and believe me, if you know what you're doing, writing a contract is easy.  One mistake however, could cost a lot of money.

What about the "For Sale By Owner" brokerages?

There are brokerages out there that for a flat fee or discount fee will get you set up in the MLS, do some basic advertising, etc. on your behalf, but you are still considered to be selling the home yourself.  I have never worked for one of these brokerages, but from what I have seen the fee they charge and what you get are not proportionate.  Most of what they do, you could truly do yourself and if you are going to go "For Sale By Owner" I'd say go it alone without the help of these companies.

What I don't like (personally) about these companies is that I don't feel they are doing right by their clients.  In Texas, when we begin an agent-client relationship, we have certain duties to you (as well as you to us) and when we're a Realtor®, we have a Code Of Ethics that we adhere to as well.  By not fully representing the "For Sale By Owner" seller, I feel they are short changing you and not performing the duties that we as agents should adhere to (regardless of our status as a Realtor® vs. a real estate agent).

I know people who have had great experiences with these companies of course, so this is simply my opinion.  I know I had thought about selling my personal home as a FSBO before I became a Realtor®.  I wound up not doing it and after learning more about real estate and becoming an agent, I know I would never consider it again.  In fact, when I do sell my home here in San Antonio, I will probably have another agent list it, as I don't ever do double-siding (representing both seller (me in this case) and buyer) and I'd prefer not to put myself in any sort of conflict-of-interest position.

image courtesy of Robert Couse-Baker

Exposure, the internet, and you.

When you're thinking about selling your San Antonio home, you have a lot to consider.  Price, staging or not, different listing tactics (bonuses, allowances, residential service contracts, inclusions, etc.), and who your Realtor® will be.  It's a huge step in your life and getting it right is the goal.  A improperly listed home can languish on the market and cause you more headaches than you want (who wants headaches?).  One of the biggest functions of a Realtor® during your listing is getting your home noticed.  With plenty of houses to choose from and buyers spending more and more time researching homes before they even contact an agent, your San Antonio home needs to be a stand out in order to sell quickly.

There are many ways to make your home shine and your Realtor® (and the internet) have a lot of great resources to help make your home stand out, but the one thing that will truly make your home stand out?  Exposure.  It may sound simple, but I see cases of it being overlooked all the time.  You want to have your home out there, searchable and available to view on the internet, even at 3AM (and believe me, based on Google Analytics for my San Antonio MLS search tell me many people are looking at those hours).

Take a few houses that you know are for sale.  Try Googling them.  Can you find them?  Can you find multiple sites that have info on the home?  Any special stand-out sites with extra photos, descriptions, or video?  The more you find, the better.  Try different words for the homes.  Don't just Google the address, try the neighborhood.  When you start seeing the home in multiple places, you can see how much easier it is for a buyer to stumble across it when they are searching in their pajamas.

We have tools, but not everyone uses them.

Not every agent is using the internet to the best of it's abilities.  Some of them don't use it all (and still have great success), but many of us have embraced technology and are doing everything we can to make sure when someone hits Google, they find your home.  Recently, while doing research on homes for buyer-clients and I tried Googling several homes, guess what I found?  Nothing.  Not even on sites like Trulia.  When I finally found the home, it was exclusively on their broker's site, but not on any of the major portals (and the agent's didn't have personal sites either).  One place.  That's not much in terms of exposure.  The broker's site looked great, but if I had to spend that much time finding that specific home, what do you think a typical buyer would do?

Where is your home going to be when you list it?  Will it be left to languish on the internet, never to be found?  Or will it be exposed for the right buyer to find?  Don't let your home be invisible.  Let me show you how.

photo courtesy of Melody Salazar

Salazar Staging - serving San Antonio, New Braunfels, and Canyon Lake.

You've heard it before.  "Stage your home to sell."  Whether on the internet or on TV, staging is a hot topic.  When the problem arises that your home isn't selling or you want to enter the market with a bang, Salazar Staging can be your local solution.  Offering a full range of consultation, design, decorator, and even furniture rentals; Salazar Staging is your one stop shop in the Austin to San Antonio corridor.

Selling your home is all about making the buyer feel like they are already in their new home.  From the moment they walk through the door they should be able to envision themselves living in your house.  Remember, you're selling them their future.  A successful stager can help you do just that.  Melody Salazar of Salazar Staging is a certified real estate stager and interior decorator and has an eye for the perfect touches.  She specializes in budget staging as well, trying to keep costs low for the homeowners of San Antonio, New Braunfels, and Canyon Lake.  With Melody, no job is too big or too small.

What does it take to stage your home?  Let the pictures do the talking.

If you're thinking of selling your home, why not give me a call and we can discuss staging your home for success.  I will arrange for Salazar Staging to visit with you at the same time, so the two of us together can show what can be done to get your San Antonio area home to sell faster.

If you're currently working with a Realtor® is San Antonio, you can call Melody Salazar direct at (830) 626-8967 or have your agent arrange a visit with her or connect with her right here on ActiveRain.

photo courtesy of stevoarnold

As a real estate blogger, I read a lot of other blogs.

Although all real estate is locally based and every market has its own trends and peculiarities, the fact remains that many great agents out there are giving solid advice that can be used in any market.  Although some of these posts specifically point out markets many miles away from us here in San Antonio, they are posts that you can glean information from when selling your home.  Of course, no list would be complete without something I wrote (since I'm here in San Antonio), so the list is actually ten articles, not nine.

I hope you enjoy reading these articles and the style of each of the writers.  They're people I read regularly and I have spoken to.  They're people who I learn from everyday.  They're people who I would trust to help my own clients, should they decide to move to the agent's area.

Bill Gassett - Top 10 Mistakes to Avoid When Selling Your Massachusetts Home

The Somers Team - 5 Steps in Choosing a Realtor to Sell Your Property

Lane Bailey - The best agent to use is the one that tells me the highest price…

Brian and Rita Burke - Nobody showed up for their appointment to see our house?!?!

Sheldon Neal - Thinking of selling this Spring ? -- NOW is the time to start the PREPARATION!

Missy Caulk - Roadblocks to Successful Closings in Ann Arbor

Kristin Moran - Options for homeowners in Foreclosure

Stephanie Edwards-Musa - The Affordability Ranking ~ A Tip For Expired Listings And New Ones

Dale Cumbley - Isn’t The Market Horrible?

Matt Stigliano (me) - Ten Tips For Selling Your Home.

If you enjoy any of these writers, take a moment to say hello to them and tell them what you think.  We all love feedback and knowing who's stopped by our blogs.  So take a moment and leave a comment for them or send them an email.  They'll appreciate it.

I usually try to stick to my own writing on my blog, but this morning I came across this post from Christopher and Stephanie Somers from Philadelphia.  The post says it is written as it relates to the Philadelphia real estate market, but in my opinion, it relates to just about everywhere and certainly to the San Antonio real estate market.  I think its sound advice for anyone looking to sell a home and applies to today, yesterday, and tomorrow as well.  Enjoy it and feel free to stop by their site to leave them some comments.