Planning ahead....

[Debbie]

Since there will excavation happening at our new (fully paid) lot in a few weeks, I am planning ahead with Plan A, Plan B, Plan C, etc.

Maybe it's a bad habit of mine, planning things in advance as well as looking at things in larger picture.

Our plan is to stay in our current primary house until the new house is move in ready. Then move out of current house so that we can have the house painted and new floorings in. Then put the house up for sale. We can do double mortgages for a few months but not sure how much longer.

Depending on how fast the new house is built, we plan to move out between Jan-March 2007. We'd need about 2-3 weeks to finish with paint and new floors before putting it up for sale.

In spite of the village we live in happens to be a very popular village, I'm not very confident that we'd be able to get our house sold due to constant changing of housing market.

I striked out potential plan B which is to rent because we'd lose the 121 Exclusion.

We're not really thrilled with the idea of contract for deed since we'll need to pay off the mortgage as quickly as possible.

Any ideas for potential Plan B and (perhaps) Plan C?

Thanx. Debbie

[mike_mn]

I striked out potential plan B which is to rent because we'd lose the 121 Exclusion.


With the amount of threads on this subject it is surprising this still comes up.

You can rent your house for up to 3 yrs without losing the exclusion. The closing needs to occur within 3yrs after you owner occupy for at least 2 yrs. You will have to recapture the depreciation you claim, however, it is not costing you anything but the benefit you received by taking it...just paying back the benifit you get today later...

You must live in the home for 2 of the last 5 yrs. Whether that is the first 2 yrs or the last 2 yrs doesn't matter, you just need to live in it for any 2 yrs of the last 5...

The ideal solution for those that like to move every 2 yrs or so is to buy A, live in A for 2yrs, then rent A and live in B for 2 yrs. Then Sell A, Rent B and live in C for 2 yrs. Then Sell B rent C and live in D for 2 yrs. If all works well(appreciation), you will pay no tax on the home gains if the market is still appreciating well and/or you bought at a good price in the first place. The depreciation recapture is a mute point since you are just repaying a tax benifit you already receieved...

[Debbie]

I knew about the last five year but I keep forgetting that it didn't matter if the 2 years is at the beginning/middle/end of five years......

As for moving every two years, I don't know---with two young kids. That's hard to do in order to provide stability. Not a problem after they're grown. I do wonder how many families actually take advantage to move every two years for the 121 exclusion purpose?

Thanx for reminding me. It's easy to be objective for someone else but harder to be objective of oneself.

Debbie

[mike_mn]

It's easy to be objective for someone else but harder to be objective of oneself.


You got this right...Too much dang emotion in life decisions...I am guilty...

As far as moving every 2 yrs, I could not do it either. I might be more tempted to do it if I didn't love my house so much. It was a fluke we(my wife) found it. I can only hope we can live here for many years to come...

[Aldo]

Two tips to help get your home sold quickly. I learned the first one 10 days ago but couldn't discuss it with my broker until today when she returned from vacation. While talking about it, she suggested the second one which she says works better. Both should generally only be used when one is in a situation such as you and I, that is, paying mortgages on two personal homes and living in one.

Tip 1: Offer to pay a 8-10% commission.

PAUSE..............................

Okay, now that you've recovered, I'll explain. If a realtor is showing two similar homes and one offers s significantly higher commission, which one do we think will get the extra press? Further, the added commission might be offset by selling sooner and not having multiple mortgage payments for a number of months. That's a no-brainer for me. I'm paying $2K/mo for a house I don't live in.

Tip 2: Offer a $2K bonus to the specific realtor who sells your home. The selling broker will get the entire $2K which could easily be more than his/her share of a split commission. She says it's legal, but on the edge. As above, she says it works better than Tip 1 (which does work) and I'm going for it.

[Debbie]

OW! Man, I just strained my eye muscle when I saw that statement you made: "Tip 1: Offer to pay a 8-10% commission."

I didn't even notice the "Pause" until I successfully put my eyeballs back into my sockets. Thanx a lot Aldo!

Hmmmm--as shocking as your two tips, I rather like both ideas. Just can't decide which ones......As usual, lover-boy has come to my rescue! :SM065:

Two questions:
1) 2k is separate from regular commish, out of pocket bonus?
2) This is mentioned in the MLS?

Oh, one more question- if sold by buyer's RE agent, what happens? Seller's RE agent lose the bonus? Or, as an added incentive, both RE agenst get $1K each?

[Bill W.]

The agent that brings the buyer to the table gets the money.

[mike_mn]

Oh, one more question- if sold by buyer's RE agent, what happens? Seller's RE agent lose the bonus? Or, as an added incentive, both RE agenst get $1K each?


Listing Agent = Sellers agent, Sellers Broker, Lister

Selling Agent = Buyers Agent, Selling Broker, Buyers Agent

The bonus is for the Selling Agent. The listing agent is not getting a bonus at all. Only for the buyers agent.

And, Aldo, I would love to see the commerce department rules that say that you can give an agent any money without going through the broker...See if you can get your agent to show why she thinks this does not violate RESPA. From my perspective, you can offer a bonus, but it basically does the same thing as added commission, just a bigger commission check.

[optionfl]

Offer a $2K bonus to the specific realtor who sells your home. The selling broker will get the entire $2K which could easily be more than his/her share of a split commission. She says it's legal, but on the edge. As above, she says it works better than Tip 1 (which does work) and I'm going for it. be careful aldo.

RESPA'S statutes explained: consumer protections and prohibited practices

Section 8: kickbacks, fee-splitting, unearned fees

Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or any thing of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed.

Violations of Section 8's anti-kickback, referral fees and unearned fees provisions of RESPA are subject to criminal and civil penalties. In a criminal case a person who violates Section 8 may be fined up to $10,000 and imprisoned up to one year. In a private law suit a person who violates Section 8 may be liable to the person charged for the settlement service an amount equal to three times the amount of the charge paid for the service.

http://www.hud.gov/offices/hsg/sfh/res/respamor.cfm#MT

good luck
good luck

[SlumLordMike]

You guys quit picking on Uncle Aldo. He's just trying to be right and not be questioned about it. ;) I have a little bonus program of my own.

I wonder if they'll let he and I share a cell. :D

[Aldo]

Debbie, the 8-10% commission thing would involve the standard split between the realtors and their employers, as applicable. As for the $2K thing, that's in addition to the agreed commission (4% in my case. It's nice to have a realtor in one's pocket). As Bill W. said, The agent that brings the buyer to the table gets the money. Since she stated that this is on the edge of legal, it's probably not to be shown in the MLS listing. I have absolutely no doubt that realtors have a way to covertly share such info.

To the other replies I can only say that I've shared as much as I know to this point in time. If it's legal, you can bet I'll do it. If it's not legal, I didn't know that and this thread doesn't exist. I'm just a dumb home seller who told my agent that there's an extra two grand to whoever can sell my house quickly because.......blah, blah. That's my story and I'm sticking to it.

Mike, I'd enjoy sharing a cell or even having an adjacent cell. I'm sure we'd have a lot to talk about, but you're not getting part of my bologna sandwich. Here's the plan. When we know which Felon Hotel we're going to, we'll buy it. That should make our stay much more pleasant.