Category Archives: Selling Your Home

Tax Reform Threatens the Holy Grail of Real Estate – The American Dream of Home Ownership and the Mortgage Interest Deduction

Tax Reform Impact on Real Estate

Most people would agree that the US tax code is too complex and should be simplified. Once you move from the general concept of simplification to the execution is where the difficulties occur. Personal self-interest favors keeping tax deductions one qualifies for while eliminating deductions of one’s neighbor.

Mortgage Interest Deduction

Tax deductibility of mortgage interest has been favored by the real estate industry for, what seems like, forever. Actually, it dates back to 1913 and most consider it sacred and not to be touched by any reforms. The current proposal leaves it in place, but ineffective or irrelevant, to all but the wealthiest Americans.

President Trump’s tax overhaul plan removes every deduction except for the home mortgage interest deduction and charitable contributions. Many experts argue, nonetheless, the plan effectively makes both these deductions irrelevant by doubling the standard deduction to $12k for single tax payers and $24k for married couples. No longer would state and local taxes be deductible. Effectively, over 80% of homeowner’s who itemize under the current tax system would see a greater benefit by taking the standard deduction under the new plan.

For example, a couple with a $500k mortgage (which is much higher than average) at 4% interest would pay about $20k in interest. That couple would then have to donate $4k to charities to match the standard deduction under the new plan. Fewer homeowners would choose to itemize deductions as the standard deduction would be more beneficial. This would effectively eliminate the incentive to buy homes and donate to charities. Many experts believe this could further decrease the US homeownership rate, which is currently 63% down from 69% in 2004.

Is the US destined to become a nation of renters?

The National Association of Realtors suggest most middle income homeowners who currently itemize would likely pay higher taxes due to the elimination of state and local tax deduction and dependency deductions that would be folded into the higher standard deduction.

A recent Fortune article states it a little differently, “The elimination of mortgage-related tax savings for most homeowners, and reduction for others, compounded with the loss of tax savings from deducting property taxes means the after-tax cost of home ownership will increase. A taxpayer in the 25% tax bracket with $11,000 in mortgage interest and $5,000 in real estate taxes would receive tax savings from these itemized deductions of $4,000, or $333 per month, under the current law. The elimination of the home-ownership tax subsidies means that the after-tax cost of home ownership will increase”.

Rental property owners will likely continue to enjoy favorable tax benefits.

Rental Property

While the proposal does not have all the details specified, it does not appear to reduce the tax subsidies benefiting owners of residential rental real estate.

Residential rental property owners and vacation rental property owners may continue to deduct mortgage interest paid to purchase the rental property and can also deduct state and local property taxes. These items are not considered itemized deductions but are deductions in computing net rental income.

Eliminating the state and local tax deduction under the proposal only applies to an individual taxpayer’s itemized deductions. Rental property owners will still receive the federal tax savings from both mortgage interest and real estate taxes. Clearly, the proposal creates a stark difference in the tax treatment and incentives between owner-occupied homes and rental properties.

Furthermore, rental property owners can also deduct the cost of maintenance and depreciation. When it comes time to sell, the rental property owner can use a 1031 exchange and avoid taxes on the sale and acquiring a like property. The proposals reduced tax rate of 25% for pass through will further benefit real estate rental industry.

Individual Tax Rates

Tax brackets under the new plan would also be reduced from 7 currently to 4. The top tax bracket would be reduced from 39.6% to 35%. Next, there would be a 25% and 12% bracket. The fourth bracket in the plan was not described in detail but would be for the highest income households and exceed the 35% bracket.

The alternative minimum tax and estate tax would be eliminated from the tax code.

The plan did not define tax treatment for dividends or long term capital gains, or the profit on the sale of one’s primary residence.

The gift tax was also not mentioned in the proposed tax plan. Gift taxes are payable on gifts of more than $14k annually. “Gifts” are commonly used by first time homebuyers.

Small Business

Changes in taxes for small or family owned businesses was included in the plan but not well defined. Some of these are organized as flow through businesses or pass through (sole proprietorship’s, partnerships or S Corporations) but it is unclear if all business structured as such would have a 25% maximum tax rate or if it would only be limited to an organization that meets criteria for “small” or “family owned”. It could also be defined with a revenue limit. Many legislators have previously indicated that “professional service” companies like healthcare, legal, accounting would not be eligible for the 25% maximum rate.

Corporate Taxes

The Corporate tax rate is to be reduced to 20% in the proposal. This is believed to work as an incentive to keep companies in the US instead of moving profits offshore. However, labor and raw material costs would have to be competitive to wipe out the incentive to operate globally in the most efficient manner.

Expensing Structures

The tax proposal would like to create incentives for companies to invest in new assets by allowing full depreciation or immediately expensing to lower taxable income. While all eligible assets were not specified, structures were specified, which is believed to mean buildings. If borrowed funds are used to purchase new assets and then the assets are depreciated immediately then the interest expense would not be deductible.

The tax proposal does keep the low-income housing credit to continue to provide an incentive to developers to build affordable housing.

Tax planning and preparation can be complicated, hopefully tax reform will simplify the process for most Americans. In the meantime, it is always best to consult with an expert in this area for specific advice that considers your exact circumstances. The Eillu team has decades of experience selling real estate on the Outer Banks and have insight to structure 1031 exchanges and more complicated deals. Schedule an appointment today to learn how to maximize the profit on the sale of your home with our low real estate listing commission.

MLS Monthly Outer Banks Market Report


September 2017 Outer Banks Real Estate Market Outlook and Current Statistics

Outer Banks Real Estate Market Outlook Sept 2017

The Outer Banks Association of Realtors released the September 2017 MLS Statistical Report – you can get the full report here.

Real estate sales for September 2017 in the Outer Banks increased slightly from August with 156 units to 158 units. This is almost the same as September 2016 sales of 159 units. Under contract units increased by 6% to 442 from August reported 419 units under contract. The average home price increased by 4% compared to 2016. The median single family home price has increase by 2% in 2017 while condos have increased by 5% in 2017. Some highlights from this month’s report follows.

Overall Market

Residential inventory decreased by 10% in September following last month’s 8% decrease both compared to last year. The inventory trend has continued downward for the past few months. Active residential inventory is 1484 units. The quantity sold increased by 11% following last month’s 11% increase; with volume sold up by 16% following the same increase last month.

Lots and land quantity sold increased by 6% after last month’s increase of 8%. The average sale price for lots fell by 191% and while the median price increased by 4%. Land inventory is down by 13% compared to last year.

Commercial unit sales are down by 24% following last month’s decrease of 20%. Only 16 commercial units were sold compared to 21 last year. The average and median sale prices have little relevance with such a small sample and appear skewed from a large sale last year. Commercial inventory is down 22% compared to last year with only 57 units active on the market compared to 73 units last year.

Distressed Property

Distressed sales increased in September and were 9% of all residential sales compared to 2% reported last month. There were 22 residential short sale units sold, compared to 24 short sales this time last year; an 8% change from one year ago. The average sale price decreased by 12%. The median sale price increased by 6%.

Sales for bank owned properties increased by 11% from 57 units to 63 units compared to last year. The average sale price for Bank Owned property fell by 8% compared to last year; while the median decreased by 1%.

Overall, the quantity of distressed property sold increased by 5% compared to the same period in 2016. The average price decreased by 11% and the median increased by 3%. Total volume sold is down by 8% compared to last year.

The effect distressed real estate will have on the overall Outer Banks market will continue to diminish as foreclosure and short sale inventory is depleted and the market returns to pre-recessionary levels of distressed real estate.

Residential

Single family unit sales increased by 13% slightly higher than the 12% reported last month, with 1275 units compared to last year 1130 units. The volume sold increased 17% with the average sale price increase by 4% and the median sale price increased by 2%.

Condos unit sales increased by 12% following last month’s 16% increase compared to last year. September condo unit sales were 151 compared to 135 a year ago. The volume sold increase by 10% following last month’s 14% increase. Median sale prices for condos increased by 5% compared to last year. Average sale prices fell by 1%, compared to last year. Unlike many other markets, the Outer Banks did not see an oversupply of condo construction during the boom years and current demand for condos has been strong in 2017.

Residential land unit sales increased by 3% in September. This follows the 5% YOY increase reported in August and a 19% increase reported in July. The average sale price fell by 11% while the median price was unchanged compared to last year.

Overall Days on the Market for the all residential properties is down by 39% in September following the reported 23% decrease in August. Days on the market is 124 versus 203. Upon closer inspection, for the 800 units sold since Jan. 2017 the average days on the market is a startling 46 days. Outer Banks properties are selling much faster; especially new inventory.

New Construction building permits are down by 16% with 184 units compared to 220 last years. Building permit value decreased by 21%.

Outer Banks Town Statistics

The September 2017 median sale prices for the towns in the Outer Banks and the percent change compared to 2016 appear below:

Sept 2017 OBX market report

Sept 2017 OBX market report data table

Corolla experienced the largest percentage gain of 13% compared to 2016. The next highest YTD increase was Hatteras Island at 8%; these towns are unchanged from June, July and August.

The Outer Banks real estate market is on track for a solid sales year. OBXMLS reports 442 under contract compared to 419 units reported last month. October is a great time to visit the Outer Banks and view real estate as the crowds have reduced and the weather is warm during the day but with low humidity and cool at night. Experience the colors of fall on the OBX; the marsh grass gets a pewter color, the sea oats rustle in the breeze and the deciduous trees change into the reds and golds!

If you have been thinking about an Outer Banks vacation home purchase, second home purchase or permanent home, now is the time to act. Purchasing power will decrease once the anticipated mortgage rates increase. Smart buyers and investors will lock in rates now before the increase.

Buy with Eillu and save more with our buyers rewards plan.

If you have considered selling your Outer Banks home, now may be the best time. The lower inventory levels will allow your property to be seen with less competition. The strong demand will sell your home with fewer days on the market. Our 1.5% listing commission will save you thousands of dollars!

The rental market continues to be strong to provide income from the investment and enjoyment for the family for years to come.

The Outer Banks continues to be named a top beach destination every year. Beach nourishment has recently been completed for a large portion of Dare County beaches and will ensure strong future appreciation for real estate.

Schedule an appointment today to find your vacation rental property, second home or investment property.

Eillu listing commission 1.5% Eillu buyers rewards CTA


Selling Your Home? Compare Eillu’s Marketing Checklist and Get More Value for Your Dollar

marketing checklist to sell your home

If you have considered selling your Outer Banks home, vacation rental or investment property then you should be aware of some types of marketing real estate agents use to sell your home.  Most everyone is aware of the MLS (Multiple Listing Service) that most agents use. 

In today’s internet environment, you need marketing that will stand out and get noticed in order to get results.

At Eillu, we have invested in technology to improve efficiencies.  We have a dedicated marketing team who executes a marketing plan just for your listing. This allows our agents to focus on clients.

We provide more marketing services to get your home sold for the highest price in the shortest time.  We know it doesn’t take twice as much time and expense to sell a million dollar property compared to a half million.  For this reason, we have lowered our listing commission to 1.5% (for listing over $300k) and capped them at $15k.

Compare Eillu’s marketing checklist to any other Outer Banks real estate agency to see where you will get the most value for your dollar and keep more of the profits from the sale of your real estate.  Preview our listing presentation for more details.

Eillu’s marketing checklist and full service benefits for our listings:

  • Comparative Market Analysis with Listing Price Strategy
  • Measurements & Notes of Property Features
  • Professional High Resolution Photos
  • Aerial Drone Video – with steady cam tour of inside.
  • MLS Listing
  • Listing on Syndicated Realty Sites
  • Coordinate Showings
  • “for sale” Sign
  • Lockbox
  • Blog post written specifically for your property with community highlights or links.
  • Create internet ads, brochures, email marketing for your listing, and social media posts highlighting your home and its features
  • Host Open Houses
  • Dedicated Web Page for your home on Eillu website with high quality photos
  • “Featured” listing on Eillu home page
  • Zillow 5 Star Premier Agent
  • Follow-up After Showings and Communicate Feedback
  • Review Offers in Detail & Negotiate
  • Follow-up with loan processing, inspections, escrow agents and all other closing process related items
  • Attend Home Inspection
  • Communication to Seller every step of the process
  • Secure document storage, signature and retrieval
  • Attend and Represent at Closing
  • Broker with over 20 years’ experience in OBX market—over $1 Billion in Real Estate sold under his management

Schedule an appointment today to review in detail how Eillu can sell YOUR real estate.  We will prepare a custom market analysis so you know what to expect and how your home compares to properties that are for sale and have recently sold. 

Eillu free custom market analysis


Selling Your Outer Banks Home? Be Prepared for How Much it Costs

cost to sell OBX home

When it comes time to sell your home, many owners only imagine the dollars lining their pocket.  While Outer Banks home sales have had a good year so far, it pays to be prepared for how much it may cost and set your expectations from the beginning.

Agent Fees

Traditionally, the seller pays the agent fees.  There are two sides to this coin, the listing agent and the buyer’s agent.  The going rate in the Outer Banks is typically 6%; split between the buyer’s agent and selling agent.  The average Outer Banks home is around $400k and agent’s commission could total $24,000!

At Eillu, we have a lower listing fee at 1.5% and have capped this at $15,000 for properties where the sale price is $300,000 or more.  Sellers should keep a 3% commission for the buyer’s agent to maintain your listings appeal when compared to other listings and to encourage buyer’s agents to share your listing with their buyers.  Listing with Eillu will still save you significant money.  Take the average Outer Banks home at $400k; $6,000 would be the listing agent commission (at 1.5%) plus $12,000 to the buyer’s agent.  This commission structure saves the seller $6,000.

Many times the buyer’s agent and listing agent represent different firms and have to share a portion of the commission they earn with the Brokerage Agency to cover overhead and other costs. 

Most agents do not receive a salary.  The listing agent pays upfront for all the costs to market your home.  Everything from the monthly MLS fees (multiple listing service), for sale signs, professional photographs and drone videos are paid upfront by the listing agent.  If your home does not sell then the agent is not reimbursed for his out of pocket expenses.  At Eillu, we provide additional marketing and services that some higher commission agencies do not provide. 

Closing Costs

Typically, home buyers pay more than sellers in closing costs. However, that doesn’t mean that sellers don’t pay any closing costs.  Plus, in a buyers’ market, a buyer may negotiate with the seller to pay a portion of the buyers closing costs in order to seal the deal. 

Sellers closing cost include transfer taxes.  In Dare and Currituck County the transfer tax is $1 per $100 in sale price or $4,000 for the $400k home.  Sellers should also expect to pay prorated water bills, prorated property taxes, prorated amount of HOA (home owner association fees) due, any special assessments for HOA, any outstanding invoices for repairs,  current mortgage payoff, payoff of any liens against the property, document fee for deed and lien waiver, and attorney fees.

Benefits of an Agent

Many home owners attempt to sell their home as a FSBO (For Sale by Owner) when it is a sellers’ market and believe they will save money.  The reality is actually quite different.  According to the National Association of Realtors 2016 profile the average FSBO sale prices was $185k while a home represented by an agent was $245k.  The $60,000 difference more than offsets all agent commissions. 

The listing agent does so much more than getting you more dollars from your sale.  From properly pricing your home, marketing, scheduling appointments, hosting open houses, negotiating offers and more, your agent will save you time.  The agents’ knowledge and experience will prove invaluable should any hiccup occur during the selling process or negotiation.   Your listing agent has the correct disclosure forms and process in place to make sure you comply with all legal requirements.

If you do go the FSBO route, you will have to pay the fees to list on the MLS, hire a professional photographer and drone videographer, pay for “for sale” signs, pay to list on FSBO or other websites.  You will need to prepare the marketing materials, brochures, website listing and social media postings to market your home.  Most people do not have the skills or the time to perform all the activities and tasks required to properly market their home.  A FSBO seller can’t match the reach that agents obtain through IDX (Internet Data Exchange) and syndication of listings; Eillu’s listings reach over 700 sites.

Pre-Market Expenses

Very few of us live in glass houses that are in mint condition and ready to show.  Taking the time and money to complete any small repairs will be rewarded with a quicker and higher dollar sale.  The loose door knob for a room you seldom enter may not bother you but will sure to be noted by a potential buyer or inspector. These small items can turn buyers off and may make them assume your home has not been well maintained.  Critically examine your home for any small items that need to be addressed.  Make sure any landscaping items, like removing dead trees and keeping the grass cut are also taken care of. 

Some sellers go an extra step and employ an inspector to make suggestions of any repairs that are needed.  Sellers can make the repairs and make the report available to buyers once the home is on the market.  An inspection report provided by the seller can boost buyers confidence in the condition of your home.

Your home should be spotlessly clean, polished, staged and ready before the first buyer ever walks through the door.  Most of us do not lead minimalist lives and have accumulated a lot of stuff.  While the stuff may be important to you and inspire fond memories, it will be distracting to buyers.  Family photos, travel mementos, collections and knick knacks should be removed.  Many sellers also have too much furniture as well.  For this reason, pack it up and store it offsite.  Alternatively, you can also donate or have a garage sale to dispose of unwanted items or items not needed in your next home.  This will make moving much easier.  You want to make it as easy as possible for the buyer to see the features of your home and allow them to imagine their belongings residing there.  Your listing agent can advise you with ideas to properly stage your home or you can consult with a stager or interior decorator. 

Occupied or Vacant

If you are not living in the home or it is a vacation rental, you must keep all the utilities (gas, water, electric) on to show the home and facilitate inspections.  Many vacation homes are sold with furnishings and have fewer personal mementos.  Remove any items that are not included with the sale prior to putting it on the market.  If you have already moved from the home and it is vacant but it was your primary residence, check with your insurance agent to see if you require additional coverage.

Taxes

Most of the sellers’ costs are deducted from the gains from the sale at closing.  However, if your gain from the sale is more than $250k (single) or $500k (married filing jointly) then you may need to pay capital gain taxes on the sale.  You can read more about it in our post: Don’t Let Real Estate Capital Gains Take Your Profit.  Consult with your accountant regarding your particular circumstances.  Taxes are paid the year following the sale of the real estate.

The Eillu team has decades of experience selling real estate on the Outer Banks and have insight to structure 1031 exchanges and more complicated deals.  Schedule an appointment today to learn how to maximize the profit on the sale of your home with our low real estate listing commission.

Eillu listing commission 1.5%


Don’t let Real Estate Capital Gain Taxes Take Your Profit

Don’t let Real Estate Capital Gains Taxes Take Your Profit

When it come to the IRS and taxes; nothing is ever simple.  The same is true of real estate capital gains. 

The Basics

Capital gain on the sale of your primary home is the difference between the price you paid and the price you sell it.  So, if you bought your home for $250,000 in 2012 and sell today for $500,000, you will have a gain of $250,000.  However, depending on your particular circumstances, you may not owe taxes on the gain.

The Tax Payer Relief Act of 1997 (TPA)

The IRS will allow you to exclude up to $250,000 of the gain for a single filer ($500,000 on a joint return with a spouse).  Click on eligibility requirements to read the IRS rules.

Generally, there are two tests; the ownership test and use test.  You must have owned and used your home as your primary residence for 2 out of the 5 years prior to the sale.  You can’t use the exclusion if you have taken the exclusion within the previous two years on the sale of another property.  You do not have to report the sale on your taxes if all of the gain is excluded.

Ownership & Marital Status

The exemption is straight forward for couples married with joint ownership and occupying the home for two years of the previous 5 years before the sale. 

A recently married couple who have lived in the home together for two years but the spouse was only added to the title a few months before the sale are also allowed to take the $500k exemption as long as one of the individuals did not sell property within two years and take the exemption.  Both spouses do not have to be on the title for the full two year period but both must have used the home as a primary residence for the full two year period.

All Sales Are Not Equal

Rental property and second homes are not treated the same as your primary residence.  However, if you convert a second home to your primary home, then you can get a prorated exemption based on the time it was a rental and your primary residence.   

If you purchase real estate to fix and re-sell, as a “real estate flipper”, you do not qualify for the exemption and all your gains are taxable. 

The capital gain tax rate is 15% for most folks and 20% for the top tax brackets.  A tax free 1031 exchange can be used to postpone taxes on investment property.

For higher income tax payers (adjusted gross income over $200k or $250k for married joint filing couples),  there’s potentially a 3.8% Medicare surtax on capital gains under Obama Care rules.

Capital Improvements

If you made major improvements to the home, the amount can be used to adjust your basis together with your purchase price to reduce your gain.  Generally these are improvements with a useful life of more than a year, or that increase the value, lengthen its life, or adapt it to a different use. See IRS Publication 523 for a list of qualifying improvements.  You should always keep your receipts and records of any improvements made to the home over the course of your ownership for this reason. 

The rules for items considered capital improvements can be a little tricky.  For example, replacing a broken window pane is considered maintenance while replacing windows for the home is considered a capital improvement.

Painting, replacing appliances or planting annual flowers are generally considered maintenance and are not capital improvements.  Adding a detached garage, replacing the roof or adding new HVAC would be an example of a capital improvements.

Lawyer Fees and Real Estate Commissions

The real estate commission paid by sellers for their primary residence is not deductible but can be added to your basis as the cost of the sale.  Lawyer fees are not deductible.  Fees for tax advice and preparation are deductible if you itemize your deductions and meet the 2% minimum for miscellaneous deductions.

For vacation rentals or property flippers, commission and legal fees would be deductible costs.

Partial Exclusions

If you need to sell a home due to special circumstances, like a change in health, employment or other circumstances, you may still be able to take a prorated reduction based on the amount of time you spent in the home for the prior two years.  So, if you need to move for employment reasons and only lived in the home for 1.5 years, then this is 75% of the two year period.  You would still qualify for $187.5K exemption (.75 x $250,000).

Military

Special rules apply to members of the military due to deployments and service commitments that make it more difficult to pass the use test and allows them 10 years in which to do so.

Recapture Depreciation

Tread carefully when taking a home office depreciation deduction.  All the depreciation deductions taken on your home will be subject to a higher tax, at 25% when you go to sell the home.  For example, if your adjusted basis is $250,000 and you have taken depreciation of $50,000 and sell for $500,000 then only $200,000 of your gain is excluded and $50,000 will be subject to the 25% tax.

Tax planning and preparation can be complicated.  It is always best to consult with an expert in this area for specific advice that considers your exact circumstances.  The Eillu team has decades of experience selling real estate on the Outer Banks and have insight to structure 1031 exchanges and more complicated deals.  Schedule an appointment today to learn how to maximize the profit on the sale of your home with our low real estate listing commission.

Eillu listing commission 1.5%

 

 


5 Ways Outer Banks Home Sellers Justify a Higher Price: Why You Should Put Your Best Listing Price Forward!

5 Ways Outer Banks Home Sellers Justify a Higher Price

One of the most important decisions to make when selling your home is deciding on the listing price.  There are a lot of things to consider to accurately price the home and your Realtor should discuss these with you and explain how he/she arrived at the suggested price.  After several years of having these discussions, we have found common objections owners use to justify a higher price.

I Don’t Want to Leave Money on the Table

Many owners erroneously believe they should start high for fear of missing out on the extra dollars they could make.  These sellers believe the high price will test the market and maybe someone will bite and be willing to pay the higher price.  This almost never happens.  Not only that, but the home typically will sell for less and take longer than if an accurate market price was listed from the start.  Remember, the market value of your home is what a buyer is ready, willing and able to pay – no more, no less. 

I’m in No Hurry to Sell – So I Can Drop the Price Later

Some sellers believe they can command a higher price if they just wait a little longer for the right buyer to come along.  After all, someone is bound to come along and fall in love with the home and it will be a perfect match.  Unfortunately, the longer your home is on the market the more it becomes that tired old listing.  There is a certain stigma that develops when a home has been on the market a long time.  Buyers and agents begin to wonder if there is something wrong with it.  Once you start lowering the price, it has definitely acquired that stigma.  Price it right from the beginning to get the best offer.

I Can Sell It Myself and Save the Cost of Your Commission

Yes, you can sell your home yourself.  Make sure you understand all that is involved to effectively market it, produce the proper disclosures and draft the proper documents.  Ignorance of the law is no excuse for breaking it. 

Keep in mind, you will need to pay a buyers agent commission of between 2-3% in order to attract agents to show your FSBO (For Sale By Owner).  You will also have other out of pocket costs for online listings and putting the property on MLS.  Be prepared to spend a lot of time, like having another job, on tasks to sell and show your home to potential buyers.

Before deciding on the FSBO route, read “How Much Will You Really Save by Selling Your Outer Banks Home Yourself?  According to the National Association of Realtors, FSBOs accounted for 8% of home sales in 2015. The typical FSBO home sold for $185,000 compared to $240,000 for agent-assisted home sales.

We at Eillu, have created a team approach to sell homes.  Our efficient system allows us to list homes for 1.5% listing fee, capped at $15k to pass the savings onto sellers. 

But, I Paid $x Dollar More When I Purchased the Home

It is sad when a homeowner needs to sell and finds their home worth less than what they paid for it.  This happened frequently after the most recent recession.  Unfortunately, what you paid for the home has nothing to do with what it is worth now.  If you find yourself in this position and do not have to sell, consider waiting a little longer to see if market values rise.  Of course, there is a risk that other mitigating factors may occur, like rising interest rates, that can impact the price of your home.

I Put a Lot of Money into Improvements

The sad truth is every dollar you put into your home, you will not get back out when you sell.  Most home improvements return a fraction of what is spent.  However, some of these may make your home more appealing to attract buyers and their offers.  Also, you have been able to enjoy the improvements you have made during your ownership. 

Before taking on a home improvement project, consider the typical return on investment for the improvements.  This report shows 29 projects where the average pay back is only 64.3 in resale value.  Carefully consider the improvements you make to your home to make sure it is fitting for the neighborhood.  If you over improve your home for your neighborhood, your return can be even less. 

If you are thinking of selling, contact Eillu and get a Free Current Market Analysis.  Our experts will provide a detailed analysis with comparables and explain the results.  We can also suggest some simple improvements to enhance curb appeal and attract buyers and full value offers.  We have invested in technology and process improvements to save you money.  Our listing commission is 1.5% and capped at $15k.  It is the best value on the Outer Banks.

Eillu listing commission 1.5%


Outer Banks Real Estate Total Sales and Volume at Highest Level Since 2005

May 2017 Outer Banks MLS Market Report

The Outer Banks Association of Realtors released the May 2017 MLS Statistical Report – you can get the full report here

Real estate sales in the Outer Banks continued the strong performance with each month since February having record sales numbers.  This month’s total sales (987 units) and volume (over $339 Million) is the highest level since 2005!  Some highlights from this month’s report follows. 

Overall Market

Residential inventory decreased by 11% compared to last year, following last month’s 15% drop.  The average sale price increased by 4% and the median sale price also increased by 4%.  The continued lack of inventory is likely to to put increased pressure on prices.  The quantity sold increased by 18% with volume sold up by 23% compared to last year.

Lots and land quantity sold fell by 6% following last month 10% drop.  The average sale price increased by 7% and the median price increased by 8%. Inventory is down by 14% compared to last year.

Commercial unit sales are down by 7% following last month’s decrease of 27%. Only 13 commercial units were sold compared to 14 last year.  The average and median sale prices have little relevance with such a small sample and appear skewed from a large sale last year.  Commercial inventory is down 8% compared to last year.

Residential

Single family unit sales increased by 19%, or 690 units compared to last year 579 units.  The volume sold increased 23% with the average sale increase by 3% and the median sale price decreased by 1%. 

Condos unit sales increased by 36% compared to last year; 80 units versus 59 last year. The volume sold increase by 41% with median prices increased by a healthy 12%, with the average sale price increasing at 4% compared to last year.

Residential land unit sales fell by 6% following last month’s 13% drop.  The average sale price up by 8% and the median prices up by 9%.

Overall Days on the Market for the all properties is 135 following last months reported 162 days.  However, when looking at only properties listed since Jan 1, 2017, the average Days on the Market is only 57 days.  This is another sign of how the local market has picked up this year.

New Construction building permits are down by 32% compared to last year with permit value down by 47%.

Distressed Property

There were 13 residential short sale units sold which is down 7% from than last year.  The average sale price decreased by 3%.  The median sale price increased by 8%. 

Sales for bank owned properties increased from 34 units to 40 units compared to last year. Bank Owned unit sales increased by 18%.  The average sale price for Bank Owned property fell by 13% compared to last year; while the median increased by 12%. 

Overall, the quantity of distressed property sold increased by 10% compared to the same period in 2016.  The average price decreased by 6% and the median increased by 10%. 

The effect distressed real estate will have on the overall Outer Banks market will continue to diminish as foreclosure and short sale inventory is depleted and the market returns to pre-recessionary levels of distressed real estate.

Outer Banks Town Statistics

The May 2017 median sale prices for the towns in the Outer Banks and the percent change compared to 2016 appear below:

May 2017 Outer Banks Town Sales Statistics

May 2017 Outer Banks Town Sales data table

Corolla experienced the largest percentage gain of 12% compared to 2016.  The next highest YTD increase was Hatteras Island at 8%. 

The Outer Banks real estate market is heating up.  Activity from January to May has been very robust with no signs of slowing down.  OBXMLS reports 461 units are under contract suggesting June sales will also be strong.  This reflects a normal seasonal adjustment from 473 units under contract reported in April.

If you have been thinking about a vacation home purchase, second home purchase or permanent home, now is the time to act.  Purchasing power will decrease once the anticipated mortgage rates increase.  Smart buyers and investors will lock in rates now before the increase. 

Buy with Eillu and save more with our buyers rewards plan.

If you have considered selling your Outer Banks home, now may be the best time.  The lower inventory levels will allow your property to be seen with less competition.  The strong demand will sell your home with fewer days on the market.  Our 1.5% listing commission will save you thousands of dollars!

The rental market continues to be strong to provide income from the investment and enjoyment for the family for years to come.

The Outer Banks continues to be named a top beach destination every year.  Beach nourishment for a large portion of Dare County beaches will ensure strong future appreciation. 

For more information on buying Outer Banks Real Estate, or selling Outer Banks Real Estate or to learn more about the Outer Banks in general, please check out our blog.

Eillu listing commission 1.5%             Eillu buyers rewards CTA


13 Step Guide to Selling Your Outer Banks Home

13 Step Guide to Selling Your Outer Banks Home

Make Sure You Really Want to Sell

This is by far the hardest step to complete.  This is even true when it is a 2nd home or vacation home.  Why? You have created special memories in the home, even if it was only 1 week at a time.  From a residence where your son or daughter took their first steps to watching the delight of your child standing on a surfboard for the first time, these memories stand out as the tableau of your life.  It is hard to let them go. 

Make a list of all the reasons you want to sell.  Put that list into context of what you want to do after you sell.  Are you purchasing another piece of real estate?  Make sure you consider all the potential cost of accomplishing your ultimate goal before deciding to sell.  A real estate sales contract is binding so you can’t change your mind after accepting an offer.

If you are not really committed, or just day dreaming about skipping to a tropical island then the reality is you will likely have seller’s remorse.  Maybe, now is not the right time for you to sell.  If you are not really committed, it has a way of emerging when evaluating offers or negotiating. 

Get the right Realtor

The Realtor you hire to sell your home will make a huge difference, choose accordingly.  Clearly, a part time Realtor will not exert the same effort as a full time Agent.   Interview at least 3 and see what kind of rapport you have with each.  Research the reviews or recommendations for each Realtor.  The Realtors track record of properties sold, how fast they sold and at what price will provide valuable insight.  Check out their social media and websites to get additional info. 

The bottom line is you want someone you can trust.  You want an agent who is totally informed about the local market and is constantly monitoring what is being listed and what has been sold.  Finally, choose an Agency that leverages technology to get the maximum reach and increased efficiency.

Fair market value

Pricing your home correctly when it is first listed is key.  Listing your home for sale for more than the market value will reduce activity and interest and it will just sit there.  Many times, the reductions required to get any interest are greater than if you just priced it correctly the first time.  There is a stigma applied to homes that have been reduced.  

Curb Appeal

The outside first impression of your home is your first chance to woo buyers so don’t blow it.  Many buyers will decline even going into a home they do not find appealing when they first drive up.  Don’t forget to clean up and spruce up outside.  This applies regardless of the season.

In the warm weather, it is easy to add some blooming annuals for a cheery bright welcome.  The same applies to crisp edging for sidewalks, planting beds and driveways.  Trees neatly trimmed and fresh mulch will put your homes best foot forward.

In other seasons, there are many small touches that will add curb appeal to your home.  Make sure leaves are raked and any branches that have fallen are picked up in the fall.  A seasonal wreath at the entrance is inviting and add warmth.  Make sure the entrance is clean and free of cobwebs.  Consider a bench or other item that can add interest to the front entry.

Keep a light(s) on at night for any potential buyers who drive by. Make sure the “for sale” sign can also be viewed at night.

Little Things

Don’t underestimate the value of “little things”.  Even a few “little things” can add up to be big things in a buyers mind.  Once we live in a home, we stop seeing many of the little things that a potential buyer would get “put off” by.  Try to walk through your home with the eyes of a stranger or potential buyer to identify items needing fixing.

By definition, little things do not cost a lot to fix.  It may take a little effort or elbow grease but the results will definitely pay off. 

Entryways

Many times entryways or foyers can become utility space after we live in the home for a time.  The car keys are placed on a hook or a bowl.  The mail piles up on a shelf or basket.  Coats pile up on a coatrack.  Don’t do this.  Find a new place for this stuff to keep the foyer clean and neat as possible.  Add fresh flowers, a candy dish or another decorative item to create some punch.

Storage

Buyers will look everywhere in your home.  This means your medicine cabinet, under the sink, and in the closets.  They will even open drawers (even when the home is not sold furnished).  Give them a pleasant surprise (and I don’t mean snakes in a can that will pop out and scare them) with clean and organized spaces.

No one ever said they had enough storage, ever!  With that in mind, go through all the items in your home and make 3 piles: donate, storage, trash (and keep or move).  Remove at least half of all items in your closet, medicine chest, cabinets and drawers. Neatly organize the items remaining in the house. This will boost your selling price and make it so much easier to move.

Lighting

There is no such thing as too much light.  You want to maximize the lighting in your home before showing it.  Trim outside shrubs that are blocking light into the home.  Removing heavy drapes is another good place to start.  Clean the windows, inside and out.  Next, change out the lampshades with a lighter color or more transparent fabric to allow more light to shine through.  Increase the wattage of lightbulbs to 100w.  In short, do whatever you can to increase the natural and lamp light into your home.

Remove Pets

I don’t mean you have to get rid of your furry friend.  Just make it seem as if you did.  Before showing the home, make sure pet bowls are removed, cat box is out of sight and no fur balls are drifting across the floor or hiding in corners.  Take the pet out of the home during a showing and send them to a pet sitter on the open house day.  Make sure there are no lingering odors.

Update & Repair

Small changes can make a big difference.  Get a new fresh coat of neutral paint on the walls or touch up areas that are scuffed with matching paint. Make sure to clean the curtains and or blinds (or remove them) or go buy some inexpensive new updated ones. Replace door handles (match finishes to rest of home), replace cabinet hardware (or put a fresh coat of paint on your current ones), make sure closet doors are on track, fix leaky faucets and clean the grout.

Depersonalize

You want the potential buyer to imagine themselves in your house.  It will be hard for them to do if your family pictures and treasures are filling the home.  The rule of thumb is to get rid of 1/3 of all your stuff.  While you can put it in storage, it is a good time to donate and sort out what will be needed in your new space.

Staging

Stage the home furnishing for maximum appeal.  Your Realtor or interior designer can provide more ideas to rearrange what you have to best show off the home.  Most people have too much furniture to properly show off a room.  Less is more.

The kitchen is the most important room.  Take the time to make sure it sparkles.  Small updates will go a long way here.  Swap out your cabinet hardware or re-paint them.  Add a new backsplash and a fresh coat of neutral paint.

Clean & Ready to Show

Your home must be ready to show at all times.  This can be an issue because most of us actually “live” in our homes.  No dishes left in the sink, dishwasher emptied, trash emptied.  Children’s toys must be picked up and put away.  You want it to look like a picture out of a magazine at all times.  Ideally, if you can live somewhere else and keep your home staged, do it!  I have been there with toddlers and it was hard.  I think it would be even more difficult with teenagers.  This is extremely important and you will need to get the whole family to join the effort.

Selling your home is a big decision.  The Agents at Eillu are here to help you every step of the way.  We are Full Service and have a low 1.5% listing commission. Take the first step and let us show you what we can do for you, with a Listing Presentation or find out what your home is worth with our Custom Market AnalysisContact us today to turn for sale into SOLD!

Eillu listing commission 1.5%


How Much Does it Cost to Sell Your Outer Banks Home?

cost to sell OBX home - Eillu Real Estate 1.5% comm

How much does it cost to sell your Outer Banks home?  Each home is different and has a different maintenance history.  This can impact how much you will need to spend in Pre-sale fixes.  Each deal is different and may impact how much, if any, to offer in buyer credits.  We have broken out the categories of costs and provided a typical amount and areas where you can save money.

Realtors Commissions

One of the largest single expenses in selling your home is the Realtors commission.  In the Outer Banks, Realtor commission are typically 6% of the sale price.  The seller pays both the buyers and sellers agency commissions.  This is not an insignificant amount of change.  The average OBX home is around $400,000; the 6% commission is $24,000. 

Eillu Real Estate has lowered our listing commission to 1.5%!  This will save you $6k on the sale of the $400k home.  But, this is only half of the equation.  In order to attract buyers, you will still need to offer a commission to the buyer’s agency of 2 to 3%. 

If you are considering FSBO (For Sale By Owner), make sure you have the time and skills to be able to take on the job.  Eillu Real Estate full service package is a bargain and statistics show homes represented by an owner sell for 28% less than homes with Realtors.  The lower selling price cancels out any savings realized from not paying the Realtors commission. 

Where Does the Commission Go?

Traditionally, the customary 6% commission is split 4 ways.  As a seller, you contract with ABC Real Estate to sell your home.  When XYZ Real Estate finds a buyer then each Company gets a share of the 6% commission.  After this, the listing agent and the buyers agent also get a share of the commission. The actual amount of the split may vary depending on the listing agreement.

Real Estate Agents are Contractors

Most real estate agents get commissions not salary.  This means they are considered Contractors or Self-employed.  All the costs for marketing the sellers home, hiring a professional photographer or drone videographer and the cost of putting the listing on the MLS comes out of the listing agents or brokerage pocket.  Agents will have a lot of expenses to pay before ever getting compensated with the earned commissions.

Keep in mind, if the house does not sell, the agent and brokerage do not get paid for their time or for the expenses they paid out of pocket for the marketing.

Sellers Closing Costs

Buyers tend to have higher closing costs.  Sellers should still plan on an additional 2% to cover the closing costs.  This covers such things as transfer taxes, escrow expenses and notary fees.  You will also have to pay the pro-rated share of the property taxes, HOA dues, water and sewage bills.  Of course, you also have to payoff the remainder of your mortgage.

Seller Credits to Buyer

When it is a buyers’ market, buyers will look to sellers to cover some of their closing costs to sweeten the deal.  While this is not required, it can be beneficial and the savvy seller will want to consider the big picture.  Sellers can be asked to cover the cost of the appraisal, recording and transfer fees, title insurance or a portion of the total closing costs. 

Pre-Sale Expenses

It is your choice as to how much to spend in preparing your home for sale.  Many homes can benefit from some selected “freshening” and the price the home sells for more than justifies the added expense.  A fresh coat of paint, especially if you apply it yourself, is an inexpensive way to brighten up your space. 

A thorough cleaning (performed by a pro or yourself if you don’t mind getting your hands dirty), is key to making a good first impression.  Cleaning the windows inside and out, the gutters, and tiding the landscaping and tree trimming should also be tackled.

Repairing any broken items before putting the home on the market is better than to wait for the buyers’ inspection to reveal the items and re-negotiate. 

Inspection Repairs

Most buyers today will include an acceptable inspection as a condition for their offer.  If an inspection reveals an issue with the property, then the seller can pay the cost to correct it, refuse to correct or negotiate a compromise. 

Home Warranty

Offering a home warranty to the buyers of your home may be just the thing to cinch the deal.  The cost of a warranty is about $500.  While this is not required, it may ease the mind of the buyer who is going to be strapped for the next year and does not want any surprise expenses.

Capital Gains Taxes

If the profit you make on the sale of your house is more than $250,000 (or $500k for married couples filing jointly), then Uncle Sam is going to want his cut too.  The amount you will owe depends on your tax situation.  There are also strategies to legally defer tax, like a 1031 exchange when the property was used as an investment. 

The bottom line is that a seller may have to spend up to 10% of the sale price of the home to get it sold.  This may surprise a lot of people.  Knowing how much you are likely to net before putting your home on the market is important to properly plan your next steps.

Choosing the best real estate agency to represent the sale of your home should not be based only on price.  The services you receive in exchange for that price is important to get the most value for your dollar.  Most important though, is to have trust.  Confidence that your most valuable asset is in the best hands possible.  At Eillu, our actions speak louder than words.  List with us and find: honest communication, transparency, and fairness to all parties.

1.5% listing commission with Eillu Real Estate - view listing presentation


Outer Banks Existing Home Sales Up 19% Compared to 2016!

Apr-2017-OBX-MLS-statistics

The Outer Banks Association of Realtors released the April 2017 MLS Statistical Report – you can get the full report here

Real estate sales in the Outer Banks continued the strong performance seen in February and March with record sales numbers – existing home sales are up by 19%.  Some highlights from this month’s report follows. 

Overall Market

Residential inventory decreased by 15% compared to last year, following last month’s 14% drop.  The average sale price increased by 2% and the median sale price increased by 4%.  The lack of inventory is likely to continue to put increased pressure on prices. 

Lots and land quantity sold fell by 10%.  The average sale price increased by 10% and the median price increased by 12%. Inventory is down by 16% compared to last year.

Commercial unit sales are down by 27%. Only 8 commercial units were sold compared to 11 last year.  The average and median sale prices have little relevance with such a small sample.  Commercial inventory is down 13% compared to last year.

Residential

Single family unit sales increased by 22% compared to last year.  The volume sold increased 21% with the average sale decreasing by 1% and the median sale price decreased by 2%. 

Condos unit sales increased by 23% compared to last year.  Condo median prices increased by a healthy 12%, with the average sale price increasing at 2% compared to last year.

Residential land unit sales fell by 13% compared to a year ago with average sale price up by 14% and the median up by 13%.

Overall Days on the Market for the all properties is 162 days.  However, when looking at only properties listed since Jan 1, 2017, the average Days on the Market is only 50 days.  This is another sign of how the local market has picked up this year.

New Construction building permits are down by 31% compared to last year with permit value down by 20%.

Distressed Property

There were 9 residential short sale units sold which is down 25% from than last year.  The average sale price increased by 13%.  The median sale price increased by a whopping 78%. 

Sales for bank owned properties increased from 26 units to 31 units compared to last year. Bank Owned unit sales increased by 19%.  The average sale price for Bank Owned property decreased by 14% compared to last year; while the median increased by 33%. 

Overall, the quantity of distressed property sold increased by 5% compared to the same period in 2016.  The average price decreased by 3% and the median increased by 63%.  Previously, the Outer Banks Association of Realtors commented in the report that “The jump in median sale price can be directly attributed to the sale of one high priced oceanfront home.”

The effect distressed real estate will have on the overall Outer Banks market will continue to diminish as foreclosure and short sale inventory is depleted and the market returns to pre-recessionary levels of distressed real estate.

Outer Banks Town Statistics

The April 2017 median sale prices for the towns in the Outer Banks and the percent change compared to 2016 appear below:

April 2017 Outer Banks MLS Real Estate Market Report

April 2017 Outer Banks MLS Real Estate Market Report

Hatteras Island experienced a sharp increase and had the largest percentage gain of 18% compared to 2016.  The next highest YTD increase was Corolla at 11%. 

The Outer Banks real estate market is heating up.  Activity from January to April has been very robust with no signs of slowing down.  OBXMLS reports 473 units are under contract suggesting May sales will also be strong.

If you have been thinking about a vacation home purchase, second home purchase or permanent home, now is the time to act.  Purchasing power will decrease once the anticipated mortgage rates increase.  Smart buyers and investors will lock in rates now before the increase. 

Buy with Eillu and save more with our buyers rewards plan.

If you have considered selling your Outer Banks home, now may be the best time.  The lower inventory levels will allow your property to be seen with less competition.  The strong demand will sell your home with fewer days on the market.  Our 1.5% listing commission will save you thousands of dollars!

The rental market continues to be strong to provide income from the investment and enjoyment for the family for years to come. The Outer Banks continues to be named a top beach destination every year.  For more information on buying Outer Banks Real Estate, or selling Outer Banks Real Estate or to learn more about the Outer Banks in general, please check out our blog.

Eillu buyers rewards CTA


Yes, You Can Expect More With Eillu!