Home Buyers • September 16, 2022

Common Contingencies to Ask for When Buying a Home

by Scott Gleason

Just like much of the rest of the country, the Westfield real estate market appears to be transitioning from a hot seller’s market to a more balanced one. We see fewer and fewer bidding wars nowadays. In turn, buyers now seem more comfortable asking for certain conditions (aka contingencies) than they have in a while. Even so, buyers need to temper just how many of these conditions they include in their offer. Otherwise, the seller may decide to refuse it. However, there are a few common contingencies that buyers can feel comfortable including as part of the sale.

Common Contingencies to Ask for When Buying a Home

Home Inspection Contingency

While not legally required for most New Jersey home sales, I always suggest that buyers put this contingency in the sales contract…even with new construction. You need to know what condition your property is in before you invest so much money in it. Some more serious issues may lie beneath what a simple layman’s walk-through would show. An inspection typically costs between $300 and $400. This must be paid by the buyer once the inspection is done. Inspectors visually inspect the foundation, roof, electrical system, air conditioning system, and plumbing. If they find areas of concern, you may need to hire other inspectors who specialize in those specific areas for further investigation at an additional cost.

Financing Contingency

Unless you pay for your entire home purchase in cash, you may want to include a financing contingency in your sales contract. Pre-approval helps reduce the chances of your financing falling through. However, this contingency protects your Earnest Money Deposit in case your lender denies your loan.

Appraisal Contingency

Whenever you finance a home purchase, the lender requires an appraisal. So, another one of the common contingencies to include in your sales contract is the appraisal contingency. If the home does not appraise for what you need to borrow, your lender will not approve the loan. When that happens, you have three choices. One, renegotiate the sales price. Two, come up with the difference out of your own pocket. Or three, walk away.

Home Sale Contingency

Finally, if you need to sell your current home in order to fund your next one, add the home sale contingency to your contract. One way to avoid this issue is to sell your current home before looking for a new one. Yes, that means moving twice (once into a short-term rental and then again when you find your next home). But it also sets you above other buyers that may have to sell their homes first.

The fewer contingencies you include in your offer, the better. It makes for a smoother real estate transaction. And that’s what sellers appreciate even more than the price. When you decide you want to buy a new Westfield area home, contact me.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Selling Your Home • September 9, 2022

How the Capital Gains Tax Affects Home Sellers

by Scott Gleason

You sold your Westfield area home this year. You also earned a nice profit from your sale. Congratulations! But, come April 15th, you may end up owing some money because of what you made from your home sale. That is called the Capital Gains Tax. However, there are a few ways you can reduce and sometimes even eliminate this tax.

How the Capital Gains Tax Affects Home Sellers

What are Capital Gains?

First of all, it helps to know what capital gains mean. In real estate, the difference between what you paid for your luxury NJ home when you initially bought it and what you received when you sold it is called “capital gains”. For example, you paid $800,000 for your property a few years ago. You sold it for $1,350,000 this year. you received $550,000 in capital gains. Uncle Sam considers this income, therefore, taxable.

How to Reduce Your Capital Gains Tax

Fortunately, the government also put conditions in place that help reduce your capital gains tax. If you used your home as your primary residence for at least two of the previous five years, you may claim an exemption. For married couples who file jointly, the first $500,000 in capital gains may be claimed tax-free. For individuals or married persons filing separately, the first $250,000 in capital gains may be claimed tax-free. So, using the example above, married couples filing jointly only pay tax on the $50,000 not covered by the exemption ($550,000 capital gains – $500,000 exemption = $50,000). For individuals and married couples filing separately, you pay taxes on the $300,000 not included in the exemption. If you bought your home less than two years before you sold it, you might be able to claim a partial exemption. Discuss this with your accountant or tax preparer before you file.

Reducing your capital gains also reduces your capital gains tax. Gather all the receipts for expenses incurred when updating, renovating, or repairing your home during the time you owned it. Also, anything you paid to get it ready for sale may also be deducted from your capital gains (paint, repairs, landscaping, etc.). Just make sure you keep your receipts to prove these expenses.

When Does the Full Exemption Not Apply?

You should also know what stops you from being able to claim a full exemption. First, if the property you sold was not your primary residence. Next, you lived in it for less than two of the previous five years. Also, if you claimed the exemption on another property during the two years before you sold your current property. If you utilized a 1031 exchange on a property at any time in the five years before your current sale. Finally, if you pay an expatriate tax.

Again, congratulations on selling your Westfield area home and earning a profit. Nothing is certain except death and taxes. So, be smart with your money. Know your tax responsibility now so you do not get surprised when you file next year. If you have any questions, discuss them with your tax person before you file.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Home Buyers • September 2, 2022

Your Guide to a Home Appraisal

by Scott Gleason

You found your dream Westfield area home. Now it is time to cross all your “T’s” and dot all your “I’s” before it becomes all your own. And one of the first items on your closing checklist is the home appraisal. So, what exactly is that?

Your Guide to a Home Appraisal

The home appraisal is essentially a value assessment of a home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately. It is also one of the “hidden fees” every buyer needs to be aware of when purchasing their home. According to Manta.com, Westfield area home buyers should expect to pay $363 on average for their appraisal.

During a home appraisal, the appraiser conducts a complete visual inspection of both the interior and exterior of the home. He or she factors in a variety of things, including the home’s floor plan functionality, condition, location, school district, fixtures, lot size, and more. An upward adjustment is generally made if the home has a deck, a view, or a large yard. The appraiser will also compare the property to several similar ones that were sold within the last six months (or less) in the area.

The final report must include a street map showing the property in question as well as the other comparable properties, photographs of the interior and exterior, an explanation of how they calculated the square footage, market sales data, and public land records, among other things.

After completion, the lender uses the information found in the home appraisal to ensure that the property is worth the amount they are investing. This is a safeguard for the lender as the home acts as collateral for the mortgage. If the buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed.

Lenders do not approve mortgage loans for more than their appraised value. If your appraisal comes back below the agreed sales price, you must then make a decision about how to proceed with the sale. First, you might try to negotiate with the seller to lower the price. Second, you could come up with the difference between the appraised value and the sale price out of your own pocket. (However, keep in mind that this is in addition to your down payment and closing costs.) Or you may want to go with a third option…walk away. Talk to your REALTOR® to determine your best course of action.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Home Buyers • August 27, 2022

Hidden Fees to Be Aware of When Purchasing a Home

by Scott Gleason

Purchasing a home is arguably one of the biggest financial decisions you will make in your lifetime. As you start your hunt, do not forget there will be costs associated with your purchase in addition to the price of your luxury NJ home. Here are five “hidden fees” to keep in mind as you begin to budget.

Hidden Fees to Be Aware of When Purchasing a Home

Home Inspection

This is a crucial step in the home buying process. The findings that come from the inspection can help you negotiate the price and repairs. According to HomeYou, Westfield area home buyers can expect to pay between $344 and $419 for a standard home inspection.

Title Services

Title services encompass the transfer of the title from the seller and a thorough search of the property’s records to ensure to no one will pop up with a claim to the property. Additionally, you may need to buy title insurance which will protect the lender or your investment in the home.

Appraisal Fee

Before getting a loan, you will likely be required to get an appraisal to determine your home’s estimated value. This will be conducted by a third-party company. According to Manta.com, can expect to pay between $280 to $476. Typically, Westfield area home buyers pay an average of $363.

HOA Fees

Another one of the “hidden fees” linked with a home purchase is HOA fees. Many communities have a homeowners’ association that enforces monthly fees. This money is used for general maintenance and updates to areas like pools, parks, and more. These fees vary from neighborhood to neighborhood.

Taxes

The taxes each buyer pays at the closing table differ. But it is not uncommon for it to be up to two months’ worth of county and city property taxes. Additionally, there may be taxes for the transfer of the home title.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Market Reports • August 25, 2022

August 2022 Market Update

by Scott Gleason

Curious about your home’s value?

Please click below for the market update of interest to you:

Westfield by Grade School:

Scott Gleason scott@luxuryhomesnj.com

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Home Buyers • August 19, 2022

What to Negotiate When Buying a House

by Scott Gleason

Whether you are a first-time homebuyer or a seasoned veteran, the negotiation part of a real estate transaction can be a little daunting and stressful. However, it is necessary to ensure you are getting the best possible deal for your money. So, what should you negotiate when buying a house?

What to Negotiate When Buying a House

Closing Costs

Your closing costs are determined by a variety of factors. According to New Jersey Lenders Corp., you can expect them to be between 2% and 3% of the purchase price. Ask the seller to cover some or all of the closing costs upfront or request a closing credit that can be used to make specific updates and fixes to the home.

Inspection and Closing Timing

Buyer offers that include a quick inspection and close timeline are often more attractive to sellers who have been going through the process for far too long. Just ensure you allow yourself ample time to get your financing in place and complete proper, thorough inspections.

Home Warranty

Sellers will often agree to pay the premium on the home warranty at closing and then hand it off to the new homeowner. In turn, the new homeowner is then responsible for the deductible on any future claims.

Repairs

Your inspection may uncover small or large repairs needed to bring the home up to standard. You can negotiate to have these items fixed before closing or ask for a price reduction to cover the costs.

Furnishings

Love how the seller has furnished and decorated the home? Buyers often negotiate keeping couches, fixtures, landscaping items, patio furniture, appliances, and more. And many sellers agree, wanting to make the home more appealing.

Much of the Westfield area of New Jersey continues to experience a seller’s market. Keep this in mind before you ask for contingencies. Even so, contingencies are part of negotiations when buying a house. You need an experienced REALTOR® on your side who knows the local luxury NJ homes market. Contact me when you are ready to start looking for your next home.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Local Events • August 12, 2022

New Westfield Artist Alley Submissions Now Accepted

by Scott Gleason

Westfield loves the arts in all of their forms. Visit any one of the dozens of galleries in the downtown area to see artwork of all kinds (paintings, pottery, photography, etc.). Sweet Sounds Downtown offers four different live concerts every Tuesday through the end of August. And right now, the Westfield Public Arts Commission is accepting submissions from local artists to create an Artist Alley right in the heart of downtown Westfield.

New Westfield Artist Alley

The WPAC wants to create a permanent public installation in downtown Westfield. But they need talented artists to submit their ideas. Westfield’s brand new Artist Alley will be set up on the side of the old Rialto theatre connecting Broad St. to the parking lot. They wish to see both 2D and 3D works of art (mosaics and wall sculptures) added to the wall. Each artist will be recognized for their individual work.

Anyone interested in participating in Artist Alley may email their full-color submissions to the WPAC. All submissions must be received by the end of the day on August 22nd to be considered.

New Life at the Old Rialto Theatre

The Rialto, a local landmark since 1922, closed its doors rather suddenly back in 2019. After much dispute between the owners, it reopened late last year as the Center for Creativity at the Rialto. Here, they wish to foster creativity in literature, film, live performances, and art. They also want to preserve a bit of Westfield’s past by keeping the Rialto building alive and well for future generations to enjoy.

Less than 20 towns in the entire state have kept old movie palaces like the Rialto alive. One of those towns just happens to be our very own Westfield. Support the arts and history by supporting public installations like Artist Alley. Thank you.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Home Buyers • July 29, 2022

Escalation Clause: Help for the Home Buyer in a Competitive Market

by Scott Gleason

Many buyers wonder if they should wait a little bit before actively searching for their next property. Price reductions all over the country leave buyers wondering if the market already reached its peak. If prices are on the decline, it may seem logical to wait. But in hot areas like Westfield, Scotch Plains, Cranford, and many of the surrounding areas, sellers still rule the market. So, you may find yourself in a bidding war with other buyers for a property. That means that you need to make your offer stand out. How? An escalation clause could be just the ticket to capturing a seller’s attention.

How an Escalation Clause Can Help a Buyer Make Their Offer Stick

What is an Escalation Clause?

In a regular offer, the buyer agrees to pay X dollars for the home in question. When they include an escalation clause, they propose paying an additional dollar amount over another seller’s higher offer up to a definitive amount. For example, the seller lists the price at $600,000. You put in an offer for $610,000. Your REALTOR® did their due diligence and knows that another offer is already on the table. While the seller’s agent may not disclose how the current highest offer is, they do say it is higher than that. So, you include an escalator that says you are willing to pay $5,000 more than the highest offer up to $625,000. The other offer is $615,000. Then, your new offer automatically goes to $620,000. The seller accepts your offer with the escalator and escrow opens up.

When Should You Include It in Your Offer?

An escalation clause should only be used when you are fairly certain you may find yourself in a bidding war. However, doing so lets the seller know exactly how much you are willing to pay for their home. That leaves you a bit vulnerable when it comes to negotiating. The seller may even decide to counter the escalator with a higher price, knowing how high you are willing to go.

Always discuss this option with your REALTOR® before submitting your offer to the seller. They can use their resources to find out whether this is a good idea or not.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Selling Your Home • July 22, 2022

Home Appraisal: Does Extra Clean Add Extra Value?

by Scott Gleason

Whenever a buyer finances their purchase with a mortgage loan, the lender requires a home appraisal. If the property’s appraised value falls below the agreed-upon price, your sale may fall through. So, as the seller, you want to make sure your property is in tip-top shape before the appraiser comes through. Once you get into the escrow phase of the sale, you need to go through your home once again to ensure it looks great for the appraiser. That includes cleaning it until everything sparkles.

Home Appraisal: Does Extra Clean Add Extra Value?

Bottom line? No, cleanliness technically does not affect your appraised value. However, a spotless home creates a mindset with the appraiser similar to the one it creates with a buyer. Starting off with a positive impression never hurts. Plus, it makes the appraiser (even subconsciously) think that the homeowner kept up with the property’s maintenance.

Put in the Elbow Grease

Always, always, always clean both the interior and exterior of your property before a home appraisal. That means cleaning windows, deep cleaning carpet, mopping floors, scrubbing countertops, etc. Clear the clutter. Put away toys and clothes. Make the beds. Take out the trash. Touch up paint where needed. You make an appraiser’s job easier by allowing clear access to all areas of your home. By making their job easier, it puts them in a better frame of mind. While this should not affect your home’s value, we do tend to see higher numbers for cleaner homes.

List Your Updates/Upgrades

During a home appraisal, the homeowner and/or their representative are allowed to be present. But hovering over the appraiser may agitate them. You do not want that to happen. However, you can make it easier for the appraiser by providing a list of all updates/upgrades you performed on your property, especially those that are not easily seen. That includes upgrades/repairs to the plumbing, roof, irrigation, or HVAC system.

The Way to an Appraiser’s Heart…

…is through their stomach? Well, not really. Nevertheless, providing a nice snack and beverage can only help. When they grab for a cookie and a cold bottle of water, make sure to provide them with a list of comps in the neighborhood. Yes. Running comps is part of the appraisal process. Yet, some recent comps may not show up. Your REALTOR® can make sure to print off the most up-to-date list just before the scheduled home appraisal so that it is handy. Again, this makes the appraiser’s job a little easier.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Home Buyers • July 15, 2022

Home Buying Tips to Finalize a Sale Now

by Scott Gleason

Today’s home buyers must navigate a crazy market. In the Westfield area (including Scotch Plains, Mountainside, Cranford, and the surrounding area), the marketplace strongly favors the seller. Low inventory and rising interest rates made many buyers re-evaluate their home buying budgets. If you want to finalize a sale before interest rates go up again, you may want to consider implementing these home buying tips right away.

Home Buying Tips to Finalize a Sale Now

Hire a Great REALTOR®

How do you know your REALTOR® is great? Find one with plenty of experience in the local market you want to make your home.

There is No Such Thing as a Stupid Question

Also, there is no such thing as asking too many questions. Whether your REALTOR® or your lender, anytime a question pops in your head about the home buying process, talk to them. An informed home buyer is a successful home buyer. Plus, this helps set you up to put in an offer right away when you find the perfect Westfield area home. And in a seller’s market, you have no time to spare.

Pre-Approval is Key

When you submit your offer letter, you need to include a pre-approval letter with it. Otherwise, sellers may not even bother looking at your offer. Pre-qualification is not enough anymore. Better yet, get your loan to the pre-underwriting stage, if possible. That is when your loan has gone through all of the steps except the final approval. At that point, all you need is an address, a sale price, and an appraisal that meets the lender’s requirements to finalize the financial portion of your home sale. The pre-approval process takes time. So, the sooner you start it, the better. I suggest doing this before you even start looking at homes.

Narrow Your Focus

First, determine which features your home absolutely must have. Then, ask your REALTOR® if these realistically fit within your budget and communities of interest. If you cannot find a home that fits these criteria, you might want to re-evaluate it. But the more you focus only on properties that fit within your “must” list, the less distracted you become on other homes.

Make a Strong First Impression

Finally, make sure you submit a strong first offer. A low-ball offer not only insults a seller but might stop them from even countering it. If you find yourself in a bidding war, setting your “best and final” offer on the table eliminates the back and forth of negotiating. Sometimes, this means the highest price. Sometimes it means a larger down payment and earnest money deposit. Other times, the seller may have a specific time frame they need to close in. Your REALTOR® can use their expertise and influence to dig up the information you need to craft your best offer possible to make a deal happen now.

Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes

Common Contingencies to Ask for When Buying a Home

How the Capital Gains Tax Affects Home Sellers

Your Guide to a Home Appraisal

Hidden Fees to Be Aware of When Purchasing a Home

August 2022 Market Update

What to Negotiate When Buying a House

New Westfield Artist Alley Submissions Now Accepted

Escalation Clause: Help for the Home Buyer in a Competitive Market

Home Appraisal: Does Extra Clean Add Extra Value?

Home Buying Tips to Finalize a Sale Now

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