Using more than one agent can make finding the home that’s right for you a lot more difficult.
Q– We are ready to start looking for our first home. I think we should use two or three agents to make sure we see everything that is available, but my wife thinks we should use only one. What do you think?
A–As usual, your wife is right and you are wrong.
Certainly, you should interview at least three agents before you begin house-hunting to find the one who has the most market knowledge and makes you feel comfortable when talking about your plans. But once you’ve chosen the best one, there’s no reason to work with others. All agents have access to the same listings, so a good agent will show you everything that might appeal to you within your price range.
Using more than one agent can actually hurt your efforts to find the best home and negotiate the best price. Most agents work on a commission, which means they won’t get paid unless you buy a house through them. A salesperson who knows you’re working with other agents won’t necessarily give you a 100 percent effort because there’s less chance that the time he spends with you will put money in his pocket.
Q–My husband and I sold our home six years ago and used the old tax rule that allowed older sellers to keep the first $125,000 of their profit tax free. Now, the rules have changed and married sellers can keep up to $500,000. Are we eligible for the new tax break, even though we previously used the old one?
A–Yes. The old rules allowed sellers over the age of 55 to keep up to $125,000 of their resale profit tax free. The new rules allow married sellers to keep up to $500,000 and singles to keep $250,000, regardless of their age.
The Internal Revenue Service has specifically stated that sellers who previously claimed the old $125,000 tax break are still eligible for the full $500,000/$250,000 exclusions provided by the new law. The only requirement is the property you sell now must have been your primary residence for at least two of the past five years.
Q–Why is the government talking about raising interest rates to stop inflation? Wouldn’t it make more sense to lower rates instead?
A–Interest rates are governed by the Federal Reserve Board, a group of economists and bankers who are chosen by the president and confirmed by Congress. Fed members track the economy by studying literally dozens of different monthly reports and meet about once a month to decide whether rates should be raised or lowered to keep the nation’s economy on a steady keel.
Several recent reports have indicated that inflation is picking up, so Fed Chairman Alan Greenspan and the rest of his group are thinking of raising rates by one-quarter or one-half percent. True, a rate hike could lead to a short-term increase in inflation because rates on home loans and adjustable-rate credit cards would rise. But raising rates would also discourage more borrowing and spending by companies and consumers, which would eventually slow the economy down and push inflation lower.
Q–I am hoping you can clarify something for me concerning the new tax rules. If I buy a house with the intention of fixing it up and then selling it for a large profit, can I qualify to keep up to $500,000 of my profits in the home tax free if I live in the house for two years?
A–Absolutely! In fact, the 1997 Tax Reform Act that took effect last year makes buying a fixer-upper more attractive than ever.
Under the new rules, married couples can keep up to $500,000 of their resale profits tax free and singles can keep up to $250,000. The only catch is that the home must have been your primary residence for two of the past five years.
Previously, you could keep some or all of your profits away from the clutches of the Internal Revenue Service only if your next home cost more than the one you sold or if you were at least 55 years old.
The new rules make buying a fixer-upper more attractive because you can purchase the home, live in it for 24 months while you make repairs and then sell without worrying about a big tax bill. Equally important, the money you spend to improve the home can be deducted from the sale proceeds– meaning that you won’t owe the IRS a cent unless your net profit exceeds a half-million dollars if you’re married or a quarter-million dollars if single.
Q– My neighbors tried to sell their home for months and didn’t get a nibble until a friend said they should bury a statue of St. Joseph in their yard. They buried the statue and the house sold the next day, almost for the full asking price. The guy down the street did the same thing, and his ratty old dump sold in a week. Have you ever heard of this practice before?
A–Yes. I’m a skeptic, but dozens of agents and sellers over the years have told me that the best way to sell a home quickly is to bury a likeness of St. Joseph in the yard.
The Catholic Information Center in Washington, D.C., says the practice got its start when some European nuns in the Middle Ages buried a medal and prayed to St. Joseph to help with their quest for a new convent–a quest that soon proved successful. St. Joseph is the patron saint of carpenters, who build homes, and of families, who live in them.
The nice folks at the Catholic Information Center say burying St. Joseph’s likeness isn’t blasphemous as long as it’s done as a prayer or petition. But if it’s done out of superstition, you’ll tick off the Big Broker in the Sky.
If you’re inclined to give St. Joseph a try, you’re supposed to bury the statue upside down and make sure it faces your for-sale sign. Should a buyer appear like manna from heaven, dig the statue back up when the sale closes and put it in a place of honor in your next home.
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Write to David Myers, P.O. Box 2960, Culver City, Calif. 90231-2960.
