If you are considering downsizing or moving to a new area to be closer to family and friends, one factor to consider before you sell your old home and buy a new home is the property tax implications.  Often times when a homeowner sells a home that has been owned for a number of years and purchases a new home, the homeowner receives “sticker shock” in the form of substantially increased property taxes.  This might be true even where the purchase price of the newly purchased home is about the same as the sale price of the old home that was sold.  The reason for this is Proposition 13, which places a cap on property taxes by permitting property to be taxed at a maximum rate of 1% of its assessed value.  The assessed value may be increased by only 2% per year until the property is sold.  Thus, the old home’s assessed value and its property tax was kept artificially low, while the new home is taxed at the much higher reassessed value based on the market value or purchase price. The law does provide, however, certain exemptions from reassessment and, in certain instances, allows a taxpayer to transfer the base-year value of his or her old home to a newly purchased home without being reassessed.  One of these exemptions is given to taxpayers 55 years of age or older.  Under certain conditions, a taxpayer who is 55 years of age or older may transfer the Proposition 13 base-year assessment value of his or her principal residence to any replacement dwelling of equal or lesser value in the same county and, sometimes, in another county. This exemption is available for any dwelling owned and occupied by a taxpayer as his or her principal residence, unless the dwelling is receiving a different real property exemption.  The dwelling may be a single family home, a unit in a common interest development (such as a co-op, condo or townhouse) or a mobilehome.  The new replacement dwelling must have been purchased or constructed either two years before the sale of the original dwelling or two years after the sale of the original dwelling.  The key consideration is that the newly purchased home must be of equal or lesser value to the sold home. The savings could be substantial particularly where the old home was owned for a long time.  There may be other restrictions and qualifications not discussed in this article that may limit or restrict your ability to receive the exemption.  If you think you qualify for such a tax treatment, please consult with your tax professional or advisor.

If you’re waiting for signs of a housing bottom, join the club. Nobody blows a whistle and say, “It’s time to buy!”

That’s why market timing is an art, not a science, but you can improve your odds of buying wisely.

First, stop paying attention to the national media. Fear has sidelined buyers even in good markets, and that’s exactly when you need to take advantage — before other buyers wise up.

Second, be ready to pounce when you see the home you want.

The time is right to buy when you see these signs in your marketplace:

• Inventories start to decline. That means that the best buys are leaving the market, and best doesn’t necessarily mean cheap. It means the homes with the highest likelihood of profitable resale. Desirable homes will leave the market first.
• Days on market reduce. Days on market refers to the period when a Realtor enters a home in the MLS for marketing to other brokers, until the home sells. When DOMs are shorter, that signals a coming seller’s market. A seller’s market has more buyers than homes, so prices go up and selection goes down.
• Mortgage applications increase. Interest rates recently turned back the clock, causing many homeowners to jump in and refinance. Purchase applications were also up. Either way, that means homes are about to leave the market, so less inventory means firmer prices. Sellers will stop dropping their prices.
• Sold homes go for closer to listing price. In 2007, home prices dipped for the first time in four decades. With a 1.9 percent decline, homes still sold within 97 percent of listing price. When they get to 98 percent, you’d better be ready.
• Prices remain firm or rise. Prices are a product of demand. To attract buyers, sellers reduce their prices and offer more incentives. If homes are selling reasonably well, prices won’t move downward — they’ll go up.
• Incentives disappear. When a market begins to favor sellers, they don’t have to do as much to sell homes. Watch new homes and see if builders are still giving away swimming pools and granite kitchens. If they aren’t, times have changed.

Any change in condition will change others, so again — be ready. Now’s the time to buy a better house while prices are low, interest rates are low and inventory is still high.

In this buyer’s market, anything you can do to make your home standout will put you ahead of your competitors.  In this regard, the number one recommendation is to make sure your home is clean and free of clutter.  As the old proverb states, “cleanliness is next to godliness!”  This means that you should completely clean your house and yard from the curb to the back fence.  A finicky buyer will be less likely to purchase your home if there is trash and debris in the yard, grease on the kitchen range, mold and mildew in the bathroom and in the grout, filthy carpeting, clothing and other things sitting on chairs, sofas and beds.  You get the picture!  Here is a link to an article that makes other suggestions on what one can do to make your home standout: http://realestate.msn.com/Selling/Article2.aspx?cp-documentid=5602256>1=10534. 

It seems like no houses that are for sale in my area are selling?  Are you selling anything?