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You are here: Home » 2017 » July

BUYER LETTER WARNING

Let’s say you are non-contingent, pre-approved, putting a large amount of money down, and you are willing to pay over the list price. Even then, it may not be a slam-dunk to have your offer accepted on the hottest properties that are attracting multiple offers. What else can be done? Many buyers are writing personal letters (even videos) to the sellers as a way to make their offers stand out.

 

I think this can be a good idea to personalize your offer. Normally it won’t make the seller take your offer if another offer is thousands of dollars more in sales price, or they are willing to waive the appraisal contingency and you aren’t. But at least it may nudge the seller into giving your offer a second look and maybe give you a chance to match that other offer’s terms. I had two situations recently where it turned out that the seller (or seller’s adult children) knew the buyer very well and they did take a few thousand less than another offer just because of that connection.

 

But I think buyers need to be careful to not overdo it. I’ve seen some letters come in on my listings where the buyer gushes about how long they’ve been looking, how desperate they are, and how they love this home so much and that this is the ONLY home in the world for them, etc. This definitely swings the negotiating pendulum over to the seller’s side, either when negotiating the price, or negotiating repairs or appraisal challenges later. So tell them who you are and that you will be able to perform per the contract if your offer is selected. But keep it from sounding desperate unless you absolutely, positively have to have that home and are willing to give up some negotiating power.

 

1031 BASICS

If you are thinking of selling an investment property and you’ve heard that you can delay paying income tax on the gains by buying another investment property, this article is for you. This is called a 1031 exchange. In years past, you could only sell and then buy “similar” properties. For example, if you were selling a single-family home that you were renting out, you had to buy another single-family home, not a condo, or commercial building. But now the rules have been expanded so that as long as you are selling some kind of investment property and buying another type of investment property, it’s probably OK.

 

There are rules to this that must be followed. Most importantly, you have to set up the exchange BEFORE you close escrow on the first property. This means selecting a Qualified Intermediary who will step in take title of the property you are buying, so they receive the proceeds of the sale, and then they will purchase the next property for you, and then that property is put back into your name.  This way you never have what’s called “constructive receipt”’ of any of the proceeds.

 

From the time the escrow closes on the first property, you will have 45 calendar days to identify the replacement property (you can even identify more than one property in case there is a problem). Then you will have up to 180 days to close escrow on the replacement property(ies). It can be less than 180 days if you sell the first property late in the year.

 

There are other rules about the amount of debt you have on each and there is even a situation where you can buy first, and then sell, called a reverse exchange.

 

I AM NOT A TAX EXPERT OR 1031 EXPERT SO CONSULT ONE FOR YOUR SITUATION. If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). #1 for Brentwood listings sold multiple years. To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty.

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