Q–You suggested in a column that people ask three real estate agents to evaluate their property so a sale price can be set. The problem with that is the third agent usually overprices the property to get the listing.
Keep in mind that appraisers arrive at estimates after looking at multiple listing service books. They ask for a data sheet, so they know the asking price for the property.
I have never run into so many crooks until I started selling real estate. I’m considering starting a business on how not to get taken in by real estate agents and appraisers.
A–In the long run it is never in a real estate agent’s interest to overprice a home just to get the listing. One, the home won’t sell; two, the homeowner is soon dissatisfied with the lack of buyer interest; and three, the agent will soon be out of business because the homes he lists don’t sell.
Real estate agents who are successful receive 50 to 70 percent of their business from referrals by satsified home buyers and sellers. Sellers who overprice their homes on agents’ advice are not likely to provide positive references.
As for appraisers, the value of residential properties is best determined by comparing the house being appraised with completed sales of similar homes. The best source of comparable data is usually the MLS sold book.
Evey field of employment has people who are dishonest. My experience (30 years) in working with real estate agents, appraisers and loan officers is that the vast majority are honest and hard-working people we would all be pleased to call on.
Q–We’re thinking about selling our home and buying a smaller one. It is our third house. It will probably sell for the $155,000 we paid for it. We spent $30,000 on remodeling it. We had capital gains of $3,000 and $80,000 on our previous homes. Will we have to pay taxes on these gains if we buy a less expensive fourth home?
A–If you sell your current home for $155,000, spent $30,000 for capital improvements and deferred tax on $83,000 of gains from the sale of previous principal residences, you would have a taxable gain of $53,000 ($155,000 plus $30,000 minus $83,000 equals $102,000 tax basis, which is subtracted from the selling price of $155,000, for $53,000 gain).
This gain may again be deferred if you buy or build another principal residence within 24 months of the sale of your current home. See a tax accountant for advice on your specific circumstance.
