Choosing A Buyers Agent

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WITH PETER G. MILLER

Timeshares: When Vacation Property Starts to Get Taxing Q: I understand that a timeshare can be sold or given back to the original seller and the loss from the original price can be deducted as a tax loss. Is this true? A: To start, not all “timeshares”are deeded real estate – some are club memberships, vacation leases or licenses to use property.With real estate, there’s typically no provision that would force a seller to take back a property after it’s purchased.You should determine if what you have is actually “real estate”or something else. With real estate, you may be forced to pay a capital gains tax on the profit from the sale of a personal residence, but typically this does not happen because of capital gains exclusions for those who reside in a prime residence for two of the past five years. However, while profits from the sale of personal real estate are potentially subject to a tax, there generally is no write off for sale losses.As the IRS explains,“the loss on the sale of a personal residence is a nondeductible personal loss.” For details, please speak with a tax professional.

Q: We’ve received e–mail that suggests investing in New Orleans can produce huge profits, hundreds of percent per year. Is this true? A: E–mail from folks you don’t know promising vast profits,more hair, less weight and lower mortgage rates are all in the same category:Nonsense. If huge profits were availabl e ,w hy would anyone want either your money or your involvement? Instead of allegedly paying hundreds of percent for the use of your dollars, the e–mail author could go to a commercial lender and pay a regular level of interest,a far smaller cost for access to capital. Q: We’ve lived in our home for many years and will soon move to another state. Rather than selling our current house, we prefer to rent. Is there any place on the Internet where we can get a standard lease form? A: Real estate is a localized activity and lease requirements vary extensively by state, province,county, parish and city.In many cases, there is required local language that must be included in lease forms – language rarely used in other places, if at all.As an example, one community may require a certain level of interest for security deposits – while other areas have different requirements or no requirements. See ASK OUR BROKER, Page 2

Age-restricted living communities are giving many older adults the freedom of sharing lunch or a bike ride with a companion without the duties of home ownership. Once mainly concentrated in the South, adult living communities now are found all over the country, tailoring to a variety of ages, desires and situations.

Community Living: No Chores, No Bores Active adults are choosing homes to fit their busy lifestyles BY PAT PEREZ CTW Features

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obert Williams loves the numerous clubhouse activities that help spark friendships in the neighborhood he and his wife,Sally, moved into two years ago. But it's the secondary amenities of the age-restricted community known as Enclave at Ellicott Hills, Ellicott City, Md., that really make him smile. O h ,h ow he enjoys the sound of the lawn mower running on a sticky summer morning. "When it's snowing, I like to lay in bed and listen to the scraping of sidewalks,” says

Williams, 80, a retired engineer.” I know someone is taking care of the chores I always did.” Older adults, who'd rather forgo tiresome duties required with owning a home but still want an active lifestyle, now find that the landscape is filled with communities that cater to their varying whims.While the agerestricted communities of the early years concentrated in the Sun Belt states – and were surrounded golf courses – today they exist in the coldest of places often with no fairways in site. Buyers have a myriad of choices defined

by lifestyle, community and amenities.They can choose an age-restricted community or an age-targeted one, although some developments bear the description of “55-plus” or “active adult.”As the baby boomer population continues to grow, developers will find new and interesting possibilities for a very demanding segment of the population. Older adults want options, but they also want to live among their peers, and that’s why these communities are popular. "What brings people together in a community is the desire to be around like-minded

See SENIORS Page 2

Get the Most Out of Your Money with a Buyer’s Agent BY CHARLES SCUTT CTW Features

Imagine being a lawsuit plaintiff with an attorney that may not show up to court properly prepared, if at all.Worse, imagine your horror upon discovering that your attorney is a law firm partner of the defen-

dant’s lawyer. That scenario is kind of what it’s like when you’re hunting for a home but you enlist the help of a real estate agent that is not an exclusive buyer’s agent. Ultimately, your best interests may not be well represented. Consequently, you could miss out on opportunities to find a better

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home and save more money. In an ideal world,“the buyer’s agent should represent the buyer,” says Glenn Still, president of Still Brothers & Associates, Arlington,Texas.“But a buyer that wants representation should work exclusively with the agent they choose.” To ensure this, you will need

to sign an agreement that will enable your agent to become an exclusive buyer agent.An exclusivity agreement is a contract that clearly explains the agent’s obligations, the terms of the contract (typically the agreement is for anywhere from one to six months) and your responsibility

See AGENT, Page 2

BUYER’S AGENT CONTINUED FROM PAGE 1 to work with the agent, even if you find and buy a residence on your own. A buyer’s agent can work on your behalf without a contract, “but it’s unlikely that he or she will put forth 100 percent effort,” Still says. “Agents help buyers purchase homes all the time [and] say they are ‘representing the buyer’ [but] are not contractually bound to represent a buyer exclusively,” says Dale Strack, New Jersey regional director for Help-U-Sell Real Estate, Castle Rock, Colo. “They do a great job, but legally they can give certain information to the seller or seller’s agent, which could work against you.” An EBA, on the other hand,“is more likely to work harder on your behalf to find you the best house for your money,” Strack says.“And because your agent won’t reveal your motivation or feelings about a house or other information that may give the seller or his agent an advantage, you are more likely to benefit from the arms-length negotiation in the price you pay and other terms of the sale.” Another benefit to committing to an EBA is that “the buyer receives consulting advice rather

than a sales job,” says Donald J. Welsh, former broker/owner of KC Metro Home Finders, Overland Park, Kan.“If the buyer does not sign a contract, the agent has no client liabilities. In this case, you can be assured he or she will use strong sales techniques.” The disadvantage to recruiting an EBA is that the contract you must sign essentially obligates you to purchase a home with that agent if you buy within the terms of the contract. Also, depending on the contract’s fine print, you may be required to pay a separate compensation fee to the agent if the seller of the home you purchase won’t allow it to be included in the transaction. Usually, the seller’s and buyer’s agents are compensated via a commission, expressed as a percentage of the purchase price, paid by the seller – a cost that is commonly built into the home’s price tag. Welsh said another disadvantage is working with an EBA associated with a broker that lists homes for sale.“These agents have commission incentives to sell their own firm’s listings,” he said.“In this case, there can be many conflicts and no legal protection under the common law and agency.” Before choosing an EBA, be sure that person has a substantial

amount of experience, as evidenced by having done 50 or 60 transactions either representing buyers or sellers, Strack says. Most good agents are involved in an average of nine transactions a year, while very active agents often do 18 to 48 a year. Additionally, no matter whom you pick, ask that the professional disclose his or relationship as a buyer’s or seller’s agent up front. When it comes to the exclusivity agreement, the best time to sign it is at the beginning of your relationship with an agent you have chosen, Strack says. Lastly, don’t forget that you aren’t required by law to commit to an exclusive relationship with any agent. In the interests of proper etiquette and good karma, however, it’s recommended that you show loyalty to an agent that invests a substantial amount of time and energy helping you shop for a house.

© CTW Features

Ask Our Broker CONTINUED FROM PAGE 1

Because you want to get the lease right, and because you want to avoid needless disputes with tenants, it’s best to get a current and localized lease form.Sources include local real estate brokers and attorneys. In addition, sometimes community groups and government offices can provide such forms. However, you also want something more. If you’re moving to another state you need a local manager for the property.Otherwise,how do you show the home to prospective tenants? How do you order repairs?

Q: I’m considering buying a home for my daughter and son-in-law under the Federal Housing Administration’s “Kiddie” Condo Loan Program. In the event they move out of town, what would be required to remove their names as co–owners/borrowers from the title and mortgage? I want to keep sole ownership of the property and continue to make the mortgage payments. A: The “Kiddie” Condo Program is the unofficial name for FHA financing which is used to buy a property to be occupied by an adult child but financed by a parent, relative or someone with a lengthy relationship to the occupant. Usually when you have FHA loans that involve nonoccupying co-borrowers the loan amount is limited to 75 percent of the purchase pri c e .H owever,FHA rules say “maximum financing is available for single unit properties for borrowers related by blood,marriage or law or for unrelated individuals that can document evidence of a family-type,longstanding, and substantial relationship not arising from the transaction.” If you change the title to the property you effectively have “sold” it – which means new financing would be required. However, if the children move after several years you can then rent to someone else.Since deductions generally are awarded according to the proportion paid by each owner, if you make all payments you then would get all deductions. Anytime you have a real estate investment that involves relatives there are complex issues. Ownership agreements, for example, should be formal and in writing to prevent future disputes. For details, speak with a real estate broker, a tax professional,lenders and an attorney who specializes in elder law to discuss wills and living wills. © CTW Features

SENIORS CONTINUED FROM PAGE 1 individuals who have had the same experiences and are in the same phase of life," says Caryn Klebba, a spokeswoman for Del Webb Corp., Bloomfield Hills, Mich. Experts say it’s important to determine one's needs and to research the market thoroughly. And don’t just focus on the amenities. Consider how you will access health care, public transportation, educational opportunities and jobs. A 2005 Del Webb survey found that approximately 50 percent of baby boomers plan to purchase new homes for their retirement, where they can enjoy lifestyles that allow them to remain physically fit and socially active. The National Association of Home Builders reported that while site-built, single-family attached and detached homes are still the preferred housing type, age-qualified multifamily condominiums have emerged as a favorite among active adults. Other trends involve communities that embrace regional and ethnic traditions, capitalize on natural surroundings and incorporate design concepts that will allow people to age in place. Oftentimes, it’s individual amenities that make the sell.The NAHB surveyed potential buyers and identified the biggest influence on their decision: • Walking and jogging trails

were cited by 52 percent of respondents.The number increases to 65 percent for those with annual incomes greater than $75,000. • Outdoor spaces, especially park areas, could influence the buying decision of 51 percent of respondent.A park area makes a bigger difference with households planning to relocate to a suburban area than for those who prefer a rural area. • Availability of public transportation was cited as a draw by 46 percent of all buyers 55 and older.The number rises to 61 percent for those 75 and older. • Open spaces appealed to 46 percent of respondents who want amenities such as park and recreation areas, playgrounds, land set aside by the builder or developer, and natural undeveloped land. • Lakes appealed to 44 of respondents.That number dipped to 37 percent for ages 65 to 74, and 25 percent for 75 and older. Many communities fall into one of two categories: agerestricted or age-targeted. Age-restricted communities don't allow residents under the age of 19 for longer than a limited number of days. Older adults can still factor their grandchildren into the equation when they’re planning a move. In fact, the Del Webb survey found that 42 percent of respondents who plan to move in retirement say it is extremely important to be closer to family. Nearly half say that moving within three hours

of family is an important consideration.They do, however, want to live among their contemporaries. "The idea is that they've raised their children and though they love their grandchildren they don't want to raise someone else's' children," Klebba says. Someone hoping to a care for a grandchild for a year, for instance, may need to consider an age-targeted community. Williams, the Maryland retiree, says he’s picked a perfect location minutes from his grandchildren.When they’re not visiting, he and his wife turn into social butterflies. “We find any excuse for a party and a dance,” he says.

Peter G. Miller is the author of “The Common–Sense Mortgage” and a veteran real estate columnist. Have a question? Please write to [email protected].

© CTW Features

© 2005 Content That Works – All Rights Reserved • contact us at 866-6CONTENT or CONTENTTHATWORKS.com for licensing information.