DEAR BOB: I love your column and hope you can help us get our home sold. It has been listed for sale more than five months. The local market is very slow now. The listing agent has the house on her Web site and occasionally holds a weekend open house. What can we do to get our house sold so we can buy another home near my husband’s new job site? –Kendra S.
DEAR KENDRA: The primary reason a house doesn’t sell is it is overpriced. If your home has been listed for sale more than five months, something is seriously wrong.
Purchase Bob Bruss reports online.
Ask the listing agent to prepare a new CMA (comparative market analysis). This form shows recent sales prices of similar nearby homes, the asking prices of competitive neighborhood homes (your competition), and the asking prices of recently expired comparable listings (usually overpriced).
The CMA should also show your listing agent’s recommended asking price. If your home is overpriced, it’s time to face reality and reduce the asking price.
Equally important, be certain your home is correctly listed in the local MLS (multiple listing service) and on the local MLS Web site, the listing agent’s most powerful marketing tool. Also, check your home’s listing at www.Realtor.com where more than 75 percent of today’s home buyers begin their search.
In addition, ask the listing agent to explain what she has done — and is doing — to properly market your home in a slow market. How often does she advertise your home in the newspapers and in local home sales magazines? She should be holding a well-advertised open house at least once a month.
In addition, she should “network” among the MLS member agents who sell homes like yours to be certain they are aware of your home. Lastly, ask the listing agent if she recommends “staging” your home to show at its best, such as by removing old-fashioned furniture and sprucing up the interior to make it appear more attractive.
DON’T BUY A VACATION HOME AS AN INVESTMENT
DEAR BOB: I am thinking of buying a vacation home at a well-known resort area to use as a rental. I have a large equity in my primary residence, enough to buy the second home. Should I refinance my first home to pay for the second home? If not, is the mortgage interest deductible on the second home along with the depreciation? –Kerry H.
DEAR KERRY: Why do you want to buy a second, or vacation, home? Vacation rentals are among the worst real estate investments, especially when they are vacant.
The mortgage interest secured by a second or vacation home is tax deductible. However, if you borrow against your principal residence, although the IRS rarely enforces the rule, the interest on a refinanced mortgage not used for home improvements is not tax deductible.
Unless you are independently wealthy, it sounds like you are about to make a major mistake if you buy that vacation home thinking it will be a sound investment.
REPAIRS AND IMPROVEMENTS ON PRIMARY HOME ARE NEVER TAX DEDUCTIBLE
DEAR BOB: Last October we had a new roof installed on our home. It cost $23,000. A friend told me the new roof can be depreciated over the 20-year expected life of the roof. Is this true? –Marge H.
DEAR MARGE: No. Home repair and improvement costs for your personal residence are never tax deductible. However, you can add the cost of that new roof, which extends the useful life of your home, to your residence’s adjusted cost basis.
When you eventually sell the home, the result should be to reduce the amount of your capital gain. For more details, please consult your tax adviser.
The new Robert Bruss special report, “When It’s Smart to Prepay or Refinance Your Mortgage,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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