Top 5 Characteristics Home Buyers Want in a Real Estate Agent

June 30, 2011

What do homebuyers want? Recently they told us! Trulia Staff sat down with a user group and had a discussion on what they look for when hiring a real estate agent. Here’s what they had to say (in order of importance):

Guest Blogger: Cassy Rowe, Lead Mobile Interaction Designer at Trulia.com

1. Honesty and Credibility

Win them over with the truth!
When these buyers talked about honesty and credibility, it often came with stories about past negative experiences with agents. The stories were about agents trying to push them towards a more expensive purchase and a strong dislike for the false sense of urgency they feel agents create when it comes to placing an offer on a house. Buyers have expressed how hard it is to trust anyone in today’s real estate market so it’s even more important for agents to help them feel comfortable.

2. Area Familiarity

Do your neighborhood homework!
These buyers place a high importance on finding an agent who not only sells homes in a specific neighborhood, but also knows that neighborhood well. They want an agent who knows all about the schools, local parks, safety, restaurants and even the secret gems the neighborhood has to offer.

3. Good Follow Through

You say it, you do it.
During the conversation our buyers constantly verbalized their frustration with agents who didn’t do what they said. Email me, call me and send me the things you say you will. It seems like such a small thing to ask for. Do what you say, combine it with some honesty, and you’ll be an agent buyers feel comfortable working with.

4. Organization

Keep it in order.
You’re honest, you know the area like the back of your hand, and you try your hardest to follow through but it’s just so hard to keep track of your to-do lists and return every phone call. Buyers are expecting agents to be organized and put together. There are a ton of tools out there to help with this. (We love Evernote!)

5. Good Listener

Everyone is unique. Treat them like it!
Users want an agent to listen to them with a blank mind. I heard phrases such as “pigeon hole”, “judge”, “they aren’t listening”, “tell me what I want”…etc. come up in our discussion. Users don’t want an agent to assume they need A just because they hear B. They want an agent who listens to what they want and will ask as many questions as required to really understand who they are and what they are looking for.

Make sure you get those references too – recommendations and testimonials  followed closely in the 6th position.

These characteristics come straight from prospective home buyers searching on Trulia. We hope these tips help you communicate what matters most to homebuyers to further your relationships and connect with more prospects.

What To Look For When Buying a Foreclosed Home

By Andrew Johnson, ksl.com Contributor                          August 27th, 2011 @ 1:39pm

SALT LAKE CITY — As the housing market continues to struggle and employment rates fall, more and more banks are foreclosing on their loans and acquiring many different properties. As the number of foreclosed homes increases, it creates an opportunity for people to buy a home at a significantly lower price than they could have just a couple years ago.

Utah in particular has a large number of foreclosed homes that the banks need to sell as soon as possible to recoup their costs.

According to RealtyTrac, a company that collects data on auction and bank-owned listings all over the country, there were 19,453 foreclosure homes in Utah in July 2011. That works out to nearly 1 in every 373 homes.

Salt Lake County has a lot of possibilities for potential home buyers who are looking for a great deal (whether they intend to flip the house or make it their primary residence). RealtyTrac reported 7,527 foreclosures in the county — 4,139 of which are within Salt Lake City limits. Utah County has 3,484 (454 in Provo), and Washington County weighed in at 2,111 (nearly half of them in Saint George).

Purchasing foreclosed properties has the potential to create good investment returns, as well as improving the possibility of buying a home that would normally be outside of a buyer’s budget. However, buyers still need to be extremely careful about their purchases, and the price alone should not be the deciding factor. There are still many things to consider.

When investing in a foreclosure, there are important things that must be examined closely. Purchasing property sight unseen is something that only those with sizeable amounts of disposable income should consider. Take your time and look closely at some of these things and make sure that any repairs or other maintenance issues won’t end up draining all the potential profits.

• Look at the neighborhood. If there are a lot of foreclosures in the area, or the neighborhood has a high crime rate, it will very difficult to turn around and sell the house again. Even the condition of the neighbors’ yards can impact the perceived value of the house.
• Look at the landscape. If the property has been on the market for any length of time without proper maintenance, uncontrolled trees or bushes could contribute to the deterioration of the home. Vines may creep over the house and roots may crawl down toward the foundation. Make sure that someone has been watching the property between owners.
• Look at the underlying structure. Don’t turn on the utilities until an inspection has been performed on the structural components of the house. Check for cracks in the plumbing, any signs of growing mold and even questionable wiring.

Not every potential home buyer will have the necessary skills or background to properly judge the quality and value of these components. According to America’s Infomart Inc., a property preservation company in Texas, an independent inspector should be hired to take a close, professional look at the property and give buyers an accurate assesment of the home’s value. Even if someone is new to the foreclosure market, there is still a great potential to get in to a home at a significantly reduced price. Simply take the time to research the property and the market, and be prepared to do a little work to add even more value to the home.

—-

Andrew Johnson is a writer, journalist and marketing specialist. He enjoys hiking and skiing, and lives in Salt Lake County with his two kids.

Home Staging Tips That Focus on Largest Customer Segments

RISMEDIA, December 18, 2010—Selling a home in any market can be competitive. It’s essential that your sellers follow some simple, yet important tips to help make their home more salable.

A quicker home sale can be reached by keeping in mind the needs of the home’s most likely buyer and creating a fresh inspiring look just for them, according to Pulte Homes expert Janice Jones, national vice president of merchandising.

“Everyone understands the value of de-cluttering, cleaning and refreshing a home in today’s competitive market,” Jones said. “The difference between a ‘For Sale’ and a ‘Sold’ sign often boils down to effectively staging a home to appeal to young singles, families or empty nesters—the three largest customer segments that are likely to buy your home. Home sellers should have a good idea of the type of buyer who will make an offer and, since everyone likes an updated home, some simple refreshes can achieve an updated look and feel.”

Jones recommends conducting a technology overhaul prior to staging your home. “Old technology will date your home and you seldom have a second chance to make a positive first impression,” she said. “Flat screen TVs, laptop computers, iPods with docking stations and wireless technology have eliminated the need for large bulky entertainment centers or massive desks designed to hide wiring. Once you’ve rid your home of bulky, dated stereos and TVs, it’s time to hone in on attracting prospects.”

Here are a few, additional ideas:

For singles, Jones recommends emphasizing sleeping spaces and the living room, which are critical to this group. “Singles will spend a lot of time in the living room and the bedroom, which are their sanctuaries from the outside world. As a result, there is no need to set the dining room table with place settings,” Jones said. “Instead, focus on a simple TV stand with clean lines, a flat screen TV and candles in the bedroom and bathroom.”

Young families tend to revolve around children. Items that help this demographic envision themselves living in the space include age-appropriate bedding, linens and towels, a bright rug near play areas, and strategically placed toy chests with open tops. Since kids often play or watch TV on the floor, eliminate the coffee table to create a living room that appears larger and more inviting. Jones notes to remember about the garage when staging for families. “Organize children’s toys and sports equipment to showcase the garage’s storage capacity without compromising functionality,” she said.

Empty nesters tend to seek an upgrade in quality features. Upgrading bath accessories like towel bars and toilet paper holders or decorative hanging lights to a better quality and newer style will make an impact. If the budget allows, upgrading the refrigerator, stove and dishwasher can draw in a buyer.

Lighting is also a key feature for this group. Jones advises ensuring living spaces maximize natural light. If lighting is less than ideal, add lamps or a ceiling fan with light fixtures. It’s important to open heavy blinds or window coverings when showing the home.

An absolute “must” for home stagers regardless of which demographic is being targeted is color. Most sellers are instructed to use neutral colors when repainting. However, adding the right punch of color to accent walls can create depth, enhance kitchen cabinets, or bring a boring bathroom to life.

Homeowners can find color in simple accessories, like throw pillows, coffee table books, and decorative canisters. Neutral colors in flooring materials, upholstery pieces and window dressing work well because they enhance brighter accents.

When choosing colors, Jones cautions homeowners to be aware of their sensory impact:

- Red is stimulating and encourages self confidence
- Orange promotes happiness and celebration
- Yellow is uplifting and light-hearted
- Blue is calming in softer tones and promotes clarity in deeper tones
- Green is the color of nature—it feels fresh and rejuvenating
- Aqua is restful while pink is gentle and sweet—making a great pair
- Purple tones bring out a sense of compassion

“The key is to experiment and put yourself in the shoes of the prospective home buyer,” Jones said. “It may be helpful to ask a friend or relative for a brutally honest opinion before and after you start staging. You may be surprised how little changes—with a little budget—can make a huge difference to a prospective buyer.”

Welcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.

Please click on this link to view the APRIL – 2012 Newsletter Housing Trends eNewsletter:

http://DiSellsHomes.housingtrendsenewsletter.com?Newsletter_ID=284&Period_ID=390

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources.

It also includes press releases with charts and videos, key market indicators and real estate sales and price statistics, a video message by a nationally recognized economist, maps, mortgage rates and calculators, consumer articles, plus local neighborhood information and more.

If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:

http://DiSellsHomes.housingtrendsenewsletter.com?Newsletter_ID=284&Period_ID=390

Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future.

5 Tips to Prepare Your Home for Sale

By: G. M. Filisko

Published: February 10, 2010

1. Have a home inspection

Be proactive by arranging for a pre-sale home inspection. For $250 to $400, an inspector will warn you about troubles that could make potential buyers balk. Make repairs before putting your home on the market. In some states, you may have to disclose what the inspection turns up.

2. Get replacement estimates

If your home inspection uncovers necessary repairs you can’t fund, get estimates for the work. The figures will help buyers determine if they can afford the home and the repairs. Also hunt down warranties, guarantees, and user manuals for your furnace, washer and dryer, dishwasher, and any other items you expect to remain with the house.

3. Make minor repairs

Not every repair costs a bundle. Fix as many small problems—sticky doors, torn screens, cracked caulking, dripping faucets—as you can. These may seem trivial, but they’ll give buyers the impression your house isn’t well maintained.

4. Clear the clutter

Clear your kitchen counters of just about everything. Clean your closets by packing up little-used items like out-of-season clothes and old toys. Install closet organizers to maximize space. Put at least one-third of your furniture in storage, especially large pieces, such as entertainment centers and big televisions. Pack up family photos, knickknacks, and wall hangings to depersonalize your home. Store the items you’ve packed offsite or in boxes neatly arranged in your garage or basement.

5. Do a thorough cleaning

A clean house makes a strong first impression that your home has been well cared for. If you can afford it, consider hiring a cleaning service.

If not, wash windows and leave them open to air out your rooms. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Wash light fixtures and baseboards, mop and wax floors, and give your stove and refrigerator a thorough once-over.

Pay attention to details, too. Wash fingerprints from light switch plates, clean inside the cabinets, and polish doorknobs. Don’t forget to clean your garage, too.

More from HouseLogic

Develop a Landscape Plan to Fit Your Budget

Spring Cleaning Guide

G.M. Filisko is an attorney and award-winning writer who has found happiness in a Chicago brownstone with the best curb appeal on the block. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

10 Home Maintenance Tips For Spring

When was the last time you checked your foundation vents?

By Paul Bianchina
Inman News®

The sun is peeking out and the plants are starting to blossom, so it must be about time for spring chores again. Here’s my annual spring checklist of important issues to tend to around the house.

1. Roofing repairs: If you suspect winter storms may have damaged your roof, it needs to be inspected. (If you’re not comfortable with the height or steepness of your roof, hire a licensed roofing contractor for the inspection.) Look for missing or loose shingles, including ridge-cap shingles.

Examine the condition of the flashings around chimneys, flue pipes, vent caps, and anyplace where the roof and walls intersect. Look for overhanging trees that could damage the roof in a wind storm, as well as buildups of leaves and other debris.

If you have roof damage in a number of areas, or if older shingles makes patching impractical, consider having the entire roof redone. Also, remember that if the shingles have been damaged by wind or by impact from falling tree limbs, the damage may be covered by your homeowners insurance.

2. Check gutters and downspouts: Look for areas where the fasteners may have pulled loose, and for any sags in the gutter run. Also, check for water stains that may indicate joints that have worked loose and are leaking. Clean leaves and debris to be ready for spring and summer rains.

3. Fences and gates: Fence posts are especially susceptible to groundwater saturation, and will loosen up and tilt if the soil around them gets soaked too deeply. Check fence posts in various areas by wiggling them to see how solidly embedded they are.

If any are loose, wait until the surrounding soil has dried out, then excavate around the bottom of the posts and pour additional concrete to stabilize them. Replace any posts that have rotted.

4. Clear yard debris: Inspect landscaping for damage, especially trees. If you see any cracked, leaning or otherwise dangerous conditions with any of your trees, have a licensed, insured tree company inspect and trim or remove them as needed.

Clean up leaves, needles, small limbs and other material that has accumulated. Do any spring pruning that’s necessary. Remove and dispose of all dead plant material so it won’t become a fire hazard as it dries.

5. Fans and air conditioners: Clean and check the operation of cooling fans, air conditioners and whole-house fans. Shut the power to the fan, remove the cover and wash with mild soapy water, then clean out dust from inside the fan with a shop vacuum — do not operate the fan with the cover removed.

Check outdoor central air conditioning units for damage or debris buildup, and clean or replace any filters. Check the roof or wall caps where the fan ducts terminate to make sure they are undamaged and well sealed. Check dampers for smooth operation.

6. Check and adjust sprinklers: Run each set of in-ground sprinklers through a cycle, and watch how and where the water is hitting. Adjust or replace any sprinklers that are hitting your siding, washing out loose soil areas, spraying over foundation vents, or in any other way wetting areas on and around your house that shouldn’t be getting wet.

7. Check vent blocks and faucet covers: As soon as you’re comfortable that the danger of winter freezing is over, remove foundation vent blocks or open vent covers to allow air circulation in the crawl space.

While removing the vent covers, check the grade level around the foundation vents. Winter weather can move soil and create buildups or grade problems that will allow groundwater to drain through the vents into the crawl space, so regrade as necessary. Remove outdoor faucet covers. Turn on the water supply to outdoor faucets if it’s been shut off.

8. Prepare yard tools: Replace broken or damaged handles, and clean and condition metal parts. Tighten fittings and fasteners, sharpen cutting tools and mower blades, and service engines and belts in lawn mowers and other power equipment.

9. Change furnace filters: Now is the time to replace furnace filters that have become choked with dust from the winter heating season. This is especially important if you have central air conditioning, or if you utilize your heating system’s fan to circulate air during the summer.

10. Check smoke detectors: Daylight Savings Time snuck up early again this year, and that’s usually the semi-annual reminder to check your smoke alarms. So if you haven’t already done it, now’s the time. Replace the batteries, clean the covers, and test the detector’s operation before it’s too late.

If you have gas-fired appliances in the house, add a carbon monoxide detector as well (or check the operation of your existing one). CO2 detectors are inexpensive and easy to install, and are available at most home centers and other retailers of electrical parts and supplies.

Remodeling and repair questions? Email Paul at paulbianchina@inman.com. All product reviews are based on the author’s actual testing of free review samples provided by the manufacturers.

5 Real Estate Rules of Thumb: Fact or Fiction?

By Tara-Nicholle Nelson | Broker in San Francisco, CA

We humans have a natural craving to simplify the complex. This same instinct, which explains why legends, films and fairytales from every culture tend to boil down to heroes vs. villains, also explains why so many buyers and sellers desperately seek rules of thumb for making the often scary, rarely simple decisions they face.

Reality check: your real estate transaction is not a children’s story. Grown-up life is complicated, as are money matters and relationships. Since real estate involves all three (being a grown up, money and relationships), smart buyers and sellers should cast a suspicious eye at super simple real estate rules of thumb.
Let’s take a handful of the most persistent ones head on, and decipher which of them are fact, and which are fiction.

Rule of Thumb #1: Location, location, location.

Fact or Fiction: Fact.

One of the elemental truths of real estate is that almost everything can be changed about a home – except its location. By the same token, location is essential to our ability to afford and enjoy living in a place, given that it impacts everything from:

where our children go to school (and whether or not we have to pay for it),

how much time and money we spend getting to and from work,

our safety,

the beauty, quiet and convenience of our surroundings and

the recreational, shopping and cultural options which do – or don’t – become part of our daily lives. 

Location impacts whether you hear train tracks or birdsong in the morning, whether your neighbors bring you cookies or bring you drama when you move in – it can even impact your career and job prospects. The deep, numerous impacts of where we live on our experience of a home, in turn, give location a powerful role in driving whether we can resell our homes – and for how much.
The critical importance of location is one real estate rule of thumb that grows more true over time. However, the specifics of what makes a location desirable have and continue to evolve rapidly. For example, urban homes with super-short commutes to bustling job centers have grown more and more interesting to buyers as their prices have come down and gas prices have gone up.

Rule of Thumb #2: It costs more to buy than to rent your home.

Fact or Fiction: Depends on where you live.

Just today, Trulia released its latest Rent vs. Buy study, showing that in 98 percent of American cities, it’s actually less expensive to buy a home than it is to rent! Of course, the type of home you might want to buy could be more pricey than what you’d be satisfied living in as a rental, and buying a home requires an upfront chunk of dough (i.e., down payment and closing costs) that renters don’t have to come up with.
But the age-old would-be buyer objecion that “I can’t afford to buy a home” is now frequently shattered by the reality that when you take all things into account, buying a home at today’s prices and interest rates can actually cost the same or less than renting at today’s relatively high rental costs in many areas.
That said, if you live in San Francisco or New York City, chances are good that it does actually cost more to buy than to rent. But if you live elsewhere, it behooves you to actually do the math, factor in the massive tax advantages of homeownership and see which is truly more expensive for you. And make sure your decision accounts for the massive opportunity costs you might incur if you don’t take advantage of today’s prices and rates to buy a home of your own and start building equity – something you can simply never do as a tenant.

Rule of Thumb #3: List it high, to give yourself bargaining room.

Fact or Fiction: Fiction.

The fact of this matter is that if you are selling a home in a strong buyer’s market, your competition is steep. The home that presents the best value for the price is the one that is the most likely to sell. Listing your home higher than what you know it’s worth is a surefire way to alienate that relatively rare specimen: a qualified buyer with a sense of urgency who might otherwise be interested in making an offer on your home. Smart buyers who are ready to leap off the fence into homeownership do their research, and may have seen dozens – even hundreds of online listings before they make an offer. If your home is overpriced, chances are good that they’ll pass your home up, even if they like it, waiting for you to get a clue and cut the price.
There are simply too many other great homes at great prices on the market. Overpriced listings are much more likely to be a source of prolonged stress and handwringing to their owners than a source of successful sales.
If you’re tempted to list your home high, there’s something else you need to be aware of: the sweet spot phenomenon. Homes that are listed too high sometimes go through one, maybe even several, price cuts before they hit a sweet spot – the price at which buyers are drawn to the value like moths to a flame, sometimes even generating multiple offers over the discounted price (but below the original list price). Here’s some good news: you don’t have to wait months and months and go through the agony of showing upon showing and price cut upon price cut to get your home’s list price to the sweet spot where it sells.
Work with a local agent who has a strong, recent track record of selling homes, quickly and at or near their list prices, in your area. Then, trust their pricing advice. (You might find it easier to trust them if you select your agent after speaking with several.) It’s the most efficient way to leverage local market expertise to get to your home’s pricing sweet spot, quickly and with minimum drama.

Rule of Thumb #4: Always offer 10% below the asking price.

Fact or Fiction: 100% baloney. I mean, fiction.

Few decisions in real estate are so nerve-wracking as that of how much to offer for a home. These days, we search online for comparables, try to suss out their similarities and differences between those homes and our target property, run some more numbers – there might even be a spreadsheet or two involved. We ask our agent to talk with the listing agent, get a feel for the seller’s motivation level and figure out whether there are any other offers, then try to factor the competition level and any credits or bank involvement into our thinking. We touch base (again!) with our mortgage broker to understand how rates have changed since our last conversation and exactly what the monthly payment will be if we offer X or Y or Z.
And at the end of all that, buyers often still feel like the final decision about exactly how many dollars and cents to offer for their home amounts to something like licking their finger, sticking it into the wind, and just picking a number. And that just seems wrong, for a decision so important.
So it’s no wonder that one of the most frequently asked questions I personally receive is the request for the perfect rule of thumb of how much below asking a buyer should offer, given today’s market dynamics. My answer is now what it always has been and will be: sorry folks – move along – no rule of thumb to see here.
Every state, county, city and neighborhood has a different dynamic – as does every listing. Every seller, bank or individual, has its own particular motivations, situational constraints or influences (like how much they owe on the home, or the need to split proceeds between divorcing or sibling co-owners) and thought processes. If the seller feels they listed the place at an uber-low price, they might respond very differently to a particular offer than a seller who gets the same offer, but felt like they were building cushion into the list price. If the home is in a neighborhood where most homes sell for more than the asking price, or the property has multiple buyers vyying for it, even a full-price offer might get laughed at.
Long story short – the specifics of each listing’s situation absolutely must be taken into account when deciding how much to offer, along with the comparable sales data and the buyer’s own (a) financial concerns and (b) motivation level for getting the home.

Rule of Thumb #5: Listing your home as a FSBO will save you some dough.

Fact or Fiction: Fiction (with the occasional exception).

I know some will argue this point, but the data is unequivocal: homes listed for sale by owner (FSBO) simply sell for less than similar homes listed by agents. From my own observations, I’d also argue that FSBO listings often simply don’t sell at all, and many end up listed by an agent after wasting months and months of the seller’s time.
The fact is, listing your home for sale by owner might save you the commission you would otherwise have paid to a listing agent. But the FSBO sellers who are successful generally do offer to pay the buyer’s broker’s commission, so the prospect of saving the full 5 or 6 percent agent commissions is more realistically the prospect of saving 2.5 or 3 percent.
Beyond that, the smartest FSBO sellers also often end up:

• paying a limited service broker to list the property on MLS,
• paying for professional staging or investing in some level of property preparation, even if they do the labor themselves, and
• paying for an attorney to assist them with the disclosures and contracts involved in the sale —

all services that are frequently included in an agent’s services. And even those FSBO sellers still forgo the objective pricing advice and marketing expertise that a good, local listing agent would bring to the table, all included in the commission.
Fact is, many sellers who don’t hire an agent, but do cobble together a similar level of professional services and account for their own time spent on a FSBO listing, soon see that they’re not actually saving much money at all. And even those who think they can save soon see that there’s no savings if the house doesn’t sell – a common fate of FSBO’s on today’s market.
Sellers who already have in hand a buyer who is ready, willing and qualified to buy their home are the best suited for selling by owner, with the help of legal, title and escrow professionals, in my opinion. Most others should at least talk to several agents, discuss whether there’s any flexibility on commissions and be honest with themselves about what the prospect of marketing, preparing and selling the home DIY would really look like, before assuming that they’ll save a ton of dough by listing it FSBO.

All: What real estate rules of thumb have you heard? Did any work for you, or prove to be completely off-base? Do tell!

What You Can and Can’t Deduct When You Work From Home

By: Donna Fuscaldo

Published: January 3, 2012

Passing the IRS litmus test

To meet IRS guidelines, your home office must be your principal place of business, or the place you see clients in the normal course of business. Parts of your home you use to store products or equipment for your business also count. That doesn’t mean that all your work has to be done from home. If you’re an outside salesperson, you probably spend most of your work time elsewhere. But if you do you billing and return customer calls primarily from your home, your home office should qualify.

You can also qualify for the deduction if your employer requires you to work from home, as long as you don’t charge your employer rent. One big catch is that you must maintain the at-home office for your employer’s convenience, not your own, such as to complete reports at night or on weekends. Self-employed workers use IRS Form 8829 to calculate the deduction, which they list on Schedule C.

Measuring your home office

The amount you can deduct for your home office depends on the percentage of your home used for business. Your work space doesn’t need to be a separate room—a table in a corner qualifies. But it has to be an area that’s used solely for business. The tax break also covers separate structures on your property, like a detached garage you’ve converted to an office. Unlike an office inside your home, a separate structure doesn’t have to be your main place of business to qualify for a deduction. That’s because the IRS believes your family is less likely to use a separate structure as a part-time play area or den, says Mark Luscombe, principal analyst for tax and consulting at CCH.

To calculate what percentage of your house the home office occupies, divide your home office’s square footage by the total square footage of your home. If your home is 3,000 square feet and your office is 150 square feet, for example, you’d use 5% to calculate your deductions. Not sure how big your house is? Check the documents you received when you bought your home—there’s probably a detailed rendering—or measure the outside of your home and multiply length times width.

What can you deduct?

Once you’ve figured out what percentage of your home you use for business, you can apply that percentage to different home expenses. These include:

• Mortgage interest

• Real estate taxes

• Utilities (heating, cooling, lights)

• Home repairs and maintenance (painting, cleaning service)

• Home owners insurance premiums

Just take each expense and multiply it by your home office percentage (the 5% mentioned above). That’s the amount you can deduct as a business expense. So if you spend $150 a month on electricity, you can deduct $7.50 as a business expense. That adds up to a $90 deduction per tax year.

Save bills or cancelled checks to prove what you spent in case of an IRS audit. Take an hour a week to file them away. Also, only repairs can be expensed; improvements must be depreciated.

Don’t forget depreciation

Depreciation is based on the idea that everything—even something like a home—wears out eventually. To figure home office depreciation, start by calculating the tax basis of your home: generally the purchase price plus the cost of improvements, minus the value of the land it sits on. Next, multiply the tax basis by the percentage of your home used for work. This gives you the tax basis for your home office.

Usually, depreciation deductions for a home office are figured over a 39-year period. There are caveats. For a crash course, read IRS Publication 946 or talk to a tax pro.

Keep in mind that depreciation deductions on your home office increase the amount of profit on a home sale that is subject to taxes. There’s an exclusion of $250,000 of profit if you’re a single filer, $500,000 for joint filers. Consult with a qualified tax professional on how depreciation deductions affect your tax liability when you sell.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

Welcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.

Please click on this link to view the MARCH-2012 Newsletter Housing Trends eNewsletter:

http://DiSellsHomes.housingtrendsenewsletter.com?Newsletter_ID=283&Period_ID=389

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources.

It also includes press releases with charts and videos, key market indicators and real estate sales and price statistics, a video message by a nationally recognized economist, maps, mortgage rates and calculators, consumer articles, plus local neighborhood information and more.

If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:

http://DiSellsHomes.housingtrendsenewsletter.com?Newsletter_ID=283&Period_ID=389

Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future.

6 Home Deduction Traps and How to Avoid Them

By: Barbara Eisner Bayer

Published: January 5, 2012

Trap #1: Line 6 – real estate taxes

Your monthly mortgage payment often includes money for a tax escrow, from which the lender pays your local real estate taxes.

The money you send the bank may be more than what the bank pays for your taxes, says Julian Block, a tax attorney and author of Julian Block’s Home Seller’s Guide to Tax Savings. That will lead you to putting the wrong number on Schedule A.

Example:

• Your monthly payment to the lender: $2,000 for mortgage + $500 escrow for taxes

• Your annual property tax bill: $5,500

Now do the math:

• Your bank received $6,000 for real estate taxes, but only paid $5,500. It may keep the extra $500 to apply to the next tax bill or refund it to you at some point, but meanwhile, you’re making a mistake if you enter $6,000 on Schedule A.

• Instead, take the number from Form 1098—which your bank sends you each year—that shows the actual taxes paid.

Trap #2: Line 6 – tax calculations for recent buyers and sellers

If you bought or sold a home in the middle of 2011, figuring out what to put on line 6 of your Schedule A Form is tricky.

Don’t simply enter the number from your property tax bill on line 6 as you would if you owned the house the whole year. If you bought or sold a house in midyear, you should instead use the property tax amount listed on your HUD-1 closing statement, says Phil Marti, a retired IRS official.

Here’s why: Generally, depending on the local tax cycle, either the seller gives the buyer money to pay the taxes when they come due or, if the seller has already paid taxes, the buyer reimburses the seller at closing. Those taxes are deductible that year, but won’t be reflected on your property tax bill.

Trap #3: Line 10 – properly deducting points
You can deduct points paid on a refinance, but not all at once, says David Sands, a CPA with Buchbinder Tunick & Co LLP. Rather, you deduct them over the life of your loan. So if you paid $1,000 in points for a 10-year refinance, you’re entitled to deduct only $100 per year on your Schedule A Form.

Trap #4: Line 10 – HELOC limits

If you took out a home equity line of credit (HELOC), you can generally deduct the interest on it only up to $100,000 of debt each year, says Matthew Lender, a CPA with EisnerLubin LLP.

For example, if you have a HELOC for $200,000, the bank will send you Form 1098 for interest paid on $200,000. But you can deduct only the interest paid on $100,000. If you just pull the number off Form 1098, you’ll deduct more than you’re entitled to.

Trap #5: line 13 – Private mortgage insurance

You can deduct PMI on your Schedule A Form, as long as you started paying the insurance after Dec. 31, 2006. Unless Congress acts to extend the PMI deduction, however, 2011 is the last year for which you can take this deduction. (Also, this is also a good time to review your PMI: You might be able to cancel your PMI altogether because you’ve had a change in loan-to-value status.)

Trap #6: line 20 – casualty and theft losses

You can deduct part or all of losses caused by theft, vandalism, fire, or similar causes, as well as corrosive drywall, but the process isn’t always obvious or simple:

• Only deduct losses that are greater than 10% of your adjusted gross income (line 38 of Form 1040).

• Fill out Form 4684, which involves complex calculations for the cost basis and fair market value. This form gives you the number you need for line 20.

Bottom line on line 20: If you’ve got extensive losses, it’s best to consult a tax pro. “I wouldn’t do it myself, and I’ve been dealing with taxes for 40 years,” says former IRS official Marti.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.