Transferring Property Prior to Death

Sometimes, as people approach the inevitable, they start trying to get their things “in order”. They may even have a will, but they decide to transfer title to real estate prior to their death which could be an unnecessary expense for the would-be heir.

Generally, when property is passed through direction of a will, the heir will receive a stepped-up basis which means that the fair market value of the property at the time of death becomes the cost basis for the heir. If the property were sold for that fair market value, there would be no gain and no capital gains tax due.

However, if the property is gifted prior to death of the donor, along with the title to the property comes the cost basis of the property. The transfer of title does not trigger the capital gains tax but when the property is sold, the gain is calculated by subtracting the basis from the sales price leaving a capital gain subject to tax. In other words, the person receiving the gift does not get the stepped-up basis.

There certainly can be advantages to transferring the property prior to death. It completes the transfer without having to wait for the death and bypasses the probate process that might be required to settle the will. Another advantage to the donor may be to remove the property from the owner’s name which could lower the taxable estate.

Some owners may transfer title prior to death to qualify for Medicaid. The value of the asset may make them ineligible. It may trigger a Medicaid Transfer Penalty when the gift is made within five years and the basis of the property is less than fair market value.

Once a property is deeded to someone, the donor loses control of the asset and it cannot be reversed. Depending on the value of the estate, there could be gift or estate tax implications. As mentioned earlier, it may have capital gain tax consequences for the donor when they dispose of the property.

If the person receiving the gift has creditors or judgements, the gift becomes an asset subject to those creditors or judgements.

Even though the mechanics of transferring title to a property is simple, there are many things to consider for both the person giving the property and the one receiving it. Consult an attorney and tax professional to determine the best informed decision available. There could be other alternatives that would better serve your situation.

Make Your Best Offer First

Buying a home in today’s low inventory real estate market requires a new mindset for purchasers. This strategy is not about trying to negotiate the best price; it is about beating out the competition and buying the home. It may be difficult to understand until you have lost a few homes to better offers but when the reality of the situation is that there are not that many homes on the market, the competition heats up and different tactics are necessary.

Sales in December were annualized at 6.76 million, a 22.2% increase year over year according to the National Association of Realtors. The median sales price nationally is $309,800 which is up 12.9% from the previous year. Inventory for December fell to 1.9 months’ supply from 3.0 months’ supply in December of 2019. Six months inventory is considered a balanced market.

Things that work in a buyer’s market will not work in a seller’s market. The shortage of available homes for sale has led to not only shorter market times but multiple offers that have sales prices above the listing price. Buyers, especially in entry to mid-level priced ranges, may have lost out multiple times to buy a home.

Buyers must be strategic if they want to successfully put a home under contract. There are some things that are absolutely essential to just be in the game.

Unless you are paying cash and have adequate proof of funds, you need to get pre-approved. Realtors and financial advisors have been saying this for decades, but it is critical now. There are plenty of reasons that benefit the buyer but most importantly, it is to show that a buyer is serious and has gone through the effort to have a lender run his credit and verify his income, expenses, employment, and credit. Sellers want to make sure that the offer they are choosing will be able to go to closing.

If the home fresh on the market, in a desired location and price range, you need to assume there will be competing offers and you may never even get a counteroffer from the seller. You need to consider making your highest and best offer first, as if you will not get a second chance. This is more difficult for some people than others because of their bargaining nature.

Many properties are going under contract at more than asking price. One strategy that buyers are employing is the escalation clause. For example a buyer will offer full price, but their offer will state that they are willing to escalate their offer by $1,000 (for example) over any competing offer up to a specified amount. With the offers that are coming in at over asking price, there is the chance that a property will not appraise. Some buyers may show the ability to pay an amount between the appraisal and the sale price, if the property does not appraise, thus effectively removing the appraisal contingency. Of course since a cash offer will not have an appraisal, this is another reason that makes a cash offer more desirable.

Earnest money that accompanies a contract shows that the buyer is acting in good faith. The amount that may be customary may not be enough in a competing market. Consider two or three times what might be normal. Talk to your agent about what would make an impression on the seller.

While contingencies like loan approval and inspections will protect your earnest money from specific concerns like loan approval and inspections, the seller will look at them as ways that the buyer can get out of the contract and as a result they’ll need to put the home back on the market. If a seller is presented multiple offers, they might be prone to accept one with the least contingencies, especially, if the prices are comparable.

There is usually a period connected to the different contingencies that are allowed to complete them. By shortening these times as much as possible limits the time the seller might feel they are in limbo.

If you have the flexibility, you might express your willingness to move the closing and/or possession dates to accommodate the seller’s schedule. This could be an important factor in your favor and could be done in a verbal statement conveyed from your agent to the listing agent.

These are things buyers should consider and discuss with their agent before they find the home that they want to buy. While you are formulating your position, another offer may be accepted before you even make yours.

Virginia Real Estate Predictions 2021

In a normal year as part of local real estate association leadership, I would be attending the Virginia Association of Realtors Legislative Conference in Richmond. This year, due to the pandemic, that event has been held via zoom. Although the value of face to face interaction has been missing, there has been the interchange of timely information.

One of the meetings that I most appreciated was the opportunity to listen to the VAR economist Lisa Sturtevant speak about the state of real estate in Virginia.

One easy way to look at what is going on is to consider what is ‘IN’ and what is ‘OUT’.

OUT Total work from home.		IN Expect to see a shift to a hybrid model. Some days a week at home and some in the office.
OUT Open floor plan.		IN Flexible floor plan with separate spaces for different activities.
OUT Home renovations.		IN Second home purchases (beach, mountain, lake) If there is good internet you can work from home anywhere. The increase in sales has not been consistent across different localities. The shift to the country is real. By the numbers sales have increased unevenly in the following areas: Urban by 3.7%; Suburban by 11.7%; and Rural by 17.9%.
OUT Zooming with family members.		IN Living with multigenerational and extended family
OUT Extremely low inventory.		IN Very low inventory. In December listings were down 38.3% from the same time a year ago. Statewide there are 30,000 fewer listings than a year ago. The demand for housing remains strong with low inventory continuing to be the primary constraint.

Virginia is currently at 95% of Pre-Recession job totals which is better than many states. But full recovery could take years.

New construction has gained. If we see the tariffs on Canadian lumber reduced or removed, it will be good for East coast new home prices. The West coast has decreased lumber supply as a result of the fires.

The savings rate spiked in 2020 as a result of people staying home with fewer opportunities to spend money. The increased savings have allowed many new buyers to enter the market.

Job losses have been mainly concentrated among renters and as such do not impact housing sales. Mortgage rates are historically low. Pre-Covid housing demand was strong and this demand will continue. Improvement will be related to vaccine availability.

Low inventory + low mortgage rates + high demand = rising prices.

CLICK HERE FOR MORE DETAILS OF THE 2021 VAR ECONOMIC AND HOUSING PREDICTIONS

*** These are statewide numbers and may not reflect the specific Central VA information given in our local market updates. ***

Inspection Study Period

Often we encourage our buyers to request a Study Period in their Offer To Purchase contract. A study period allows the buyer a specific period of time in which to examine the property with a variety of inspections, thus a Study Period is not exactly the same as a home inspection….though it may include home inspections as well.

Is a Study Period a Home Inspection?

Purchasers of large acreage, whether for purposes of farming or development, have concerns that ordinary home buyers do not necessarily have. So there are features that differentiate a study period from a home inspection. One of the major differences is that a study period allows a range of inspections to take place over a stated period of time, not just a home/structural inspection. During the scope of the Study Period a buyer is able to examine details of the property in depth, with professional inspectors if desired, to find out details of the property that might not be readily seen….prior to fully committing to the purchase.

Why Would You Need a Study Period?

Often large tracts of land trade ownership infrequently (family farms etc) and that aspect means the property has likely not had as much examination of its deeds, covenants, or restrictions, as common residential homes and lots which are sold more often. Frequently there are details in the covenants or deed that would prohibit the purchaser’s intended use for the property. Previous owners may have put restrictions on the property, or there might be unresolved boundary disputes, or maybe the previous covenants contradict current law (like Fair Housing rules). During the study period is when any surveys would take place as well.

What Are Some Study Period Issues?

A big concern for many of our clients who intend to farm the land, is to verify the suitability of the property for their farming purposes. Typical issues that would be examined include location of available water, any previous soil contamination, existing capabilities of well or septic, underground tanks/dumps/chemicals, zoning restrictions, and of course the structural issues that may exist in the main dwelling or the outbuildings. A common resource to examine all of these issues is called a Phase 1 Environmental Assessment, conducted by a specialist who looks for any and all issues. We help guide our clients to these resources.

The buyer will want to confirm whether the property has been entered into a land-use conservancy agreement. If so the buyer may not be able to subdivide the property. Land use restrictions can dictate what descriptions of structures may be built or what type of livestock is acceptable… even whether irrigation will be approved. Some Central VA counties have rules regarding the location of a driveway or setbacks for building near a stream.

Does The Land Match My Goals and Plans?

During the study period the buyer will have time to determine if the property and land will match his own intended uses. The buyer will want to know about mineral rights or timber rights, even if those are not in his immediate plan.

The nature of the unhurried examination time of a Study Period makes it common to unearth unexpected facts. But it also gives the buyer time to see if acceptable solutions may exist. And because of the language of the Study Period in the Offer To Purchase, the buyer is also able to decide not to continue with the purchase of that property.

Don’t guess if that fence will be on your own land. Allow yourself time to verify all of the aspects of your purchase by using a Study Period to examine the details. We’re glad to discuss this with you in more detail anytime.
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Customer or Client

A Virginia realtor is required by law to treat you like either (A) a customer, or (B) a client. In Virginia, buyers and sellers are required to sign a document saying that they actually want to be a realtor’s client before we can assist with any transaction. See below to learn how buyers are required to be treated if they are a Customer or a Client in Virginia…… [Read more…]

Home Buying Steps

WHAT IS THE PROCESS OF BUYING A CHARLOTTESVILLE VIRGINIA HOME?

It’s not just first time buyers who can become overwhelmed with the process of buying a home. If you haven’t purchased a home recently, this might give you a refresher of exactly what steps will be necessary to purchase a Charlottesville Virginia home, and in what order they are likely to occur. [Read more…]

Is Buying A Home in Charlottesville, VA a Good Investment?

To consider a home a good investment, you need to know what you plan to do with it, as well as where to buy it. In Charlottesville, VA, buying a home can be a good investment. With Charlottesville country homes, there often is open land which may increase in value along with the house itself. Mark Twain is quoted as saying “buy land, they aren’t making more of it”. The fact that there is a finite amount of land, makes these homes a great asset if you need a smart place to put your money.

There are many reasons why you might be buying a home in Charlottesville, VA. You might want a home to live in with your family, or a retirement house. Others might be looking for a place with space to start a farm or raise horses. Charlottesville horse properties are always in demand. Yet, some people want to buy a home only as an investment. They may either be aiming to make a profit in the short-term, or years in the future.

Luckily, there are multiple ways to make money off of a home. Unlike how it might seem, investing in a home isn’t as easy as buying it and selling it years later. While value tends to be secure in a home, it does not necessarily increase. If you know what you are doing, investing in a Charlottesville, VA home will be easy. This article is here to tell you more on investing in Central Virginia country properties.

How to Make a Home a Good Investment in Charlottesville, VA

Real estate is a very complex domain. Ensuring that a home is a good investment requires more than just buying and selling. It requires patience, energy, time, and sometimes more money. Regardless of this, if you put in the effort, it’s possible to reap returns on a property. Here are some of the main ways to invest in a home in Charlottesville, VA.

1.Buying to sell later. The many Charlottesville equestrian estates in the area are perfect for investment. The open land offers the possibility for a variety of agricultural ventures. This could be a farm for horses, a vineyard, or a sustainable family farm, and you can add barns and agricultural buildings. Many of our local horse farms are perfect for an equestrian business. Owners can also choose to leave the property vacant, but the potential is still there. As a result of this, holding on to a property and selling it in a few years in a strong economy is likely to bring profit. With this form of investment, accumulating a profit will take several years. One major advantage is that the seller can live in the home during this period. As long as the house is well-maintained and the land is cared for, then selling value will likely stay intact.

2.Buying a rental property. In 2017, there were 43 million rental households in the United States. At any time, in Charlottesville, there will never be a dearth of potential tenants, particularly due to the University of Virginia and the University of Virginia Hospital. Many people cannot afford a home of their own, so they must rent one. For others, they see renting as a short-term alternative to buying a house. Regardless of the reason, it remains true that renters are almost always available for a well-located house. By buying rental property in Charlottesville, VA, it is possible to get consistent returns. There are two ways to approach purchasing a rental home in Charlottesville, VA:

Leave the mortgage to the tenants. By buying the house with a mortgage, you are in debt to the lender. Apart from the usual 30% paid upfront, you won’t have to pull anything else out of your wallet. This means that without much monetary commitment, your tenants will pay every month. Of course, most of their rent will go towards paying the mortgage. But, you can always ensure that there is a nice profit on top of the rent for you.

Pay off the house in full. This option is a bit more limited, as not everyone will be able to do this. When the house is paid off in full, there is more safety for the homeowner. The house is theirs, and there is no risk of foreclosure if tenants default on payment. Yet, it will take years for them to recoup the value of their investment. This option is better suited for individuals who don’t mind the long-term investment.

3.Buying a property to flip. If you ever find a good deal on a Charlottesville, VA home that needs extensive repairs, go for it. These kinds of properties are perfect for flipping, particularly when the majority of the repairs are cosmetic and not structural. When a seller knows that the home is in a state of disrepair or neglect, the value of the house gets discounted.

By purchasing the home and making repairs, it can often be sold at a significant profit. The house does not have to be in a bad state either. A house that is old or outdated can also get flipped. Such a house will likely get sold at a lower price due to its age. By renovating the structure to a more modern standard, you can add to the asking price. Flipping requires effort, time, and money, but can be profitable in the short-term, particularly if you are able to make some of the renovations yourself and do not mind some “sweat equity”.

How to Get the Best Value out of Your Investment Property

The goal of an investment is to reap a profit. The expectation is that you will try your best to maximize the profit that you get. With any luck and a few simple things in mind, you won’t leave money on the table.

Keep the property well-maintained. When you neglect a home, it begins to show. Few people want to buy a house that looks like it is falling apart. It is important to keep not only the building itself looking good but the land around it as well. Neglected land is not attractive to a potential buyer. Curb appeal matters.

Upgrade if needed. This applies to any path of investment chosen for your Charlottesville, VA, house. By making sure the house is up to date, you will earn more money from outright selling or rentals. Replace outdated utilities like pipes and electricals. Also, consider upgrades for energy efficiency or towards achieving a smart home. Be careful about what you upgrade, though. Not everything will add significant value.

Get an expert realtor. Many people want to keep all the profits to themselves, so they work alone. This can be stressful, time-consuming, and may not be worth the money ‘saved’. By getting a realtor, everything moves more smoothly. This applies to sales of property and finding renters. They can also assist you with a location-specific valuation that gets you the best price.

Charlottesville country properties are good choices for investment. To ensure you’re getting the best value you can, it is essential to work with a realtor who knows the area. For Charlottesville, VA, this is someone like Pam Dent, REALTOR.

If you’re on the lookout for investment properties in Charlottesville, you’ve come to the right place. Call Pam Dent, REALTOR, at 434-960-0161 to get started on a home.

Top 5 Golf Course Features Found in Charlottesville Golf Communities

Many who have recently moved into any one of the beautiful and breathtaking Charlottesville Golf Communities continue to discover more reasons why they made the right choice. Whether you are a golf enthusiast or someone new to the sport, the excitement and lifestyle offered by these communities make them a perfect place to find your dream home.

For fervent golfers, these communities are like heaven on earth. Life in a golfing neighborhood allows unlimited access to the fairways, opening a lot of opportunities for players to hone their skills or to meet fellow golfers who will become playing partners. For beginners, living in a Charlottesville golf community will surely make them fall in love with the sport.

Below are 5 of the best features you can find in many of Charlottesville’s golf courses sought after by avid fans of the sport.

Variety of bunkers

Holes are more difficult when there are bunkers in the golf course. Bunkers are areas filled with sand. Others are small depressions in the land. Bunkers are positioned near the fairway or guarding the green.

Fresh air and beautiful views

One of the best features of these Charlottesville golf communities is the refreshing and captivating views that surround the area. Golf is a sport that goes best with clean and refreshing mountain air; and what better place to enjoy the sport than the rolling Central Virginia landscape. The breathtaking countryside that adjoins the fairways promises an enjoyable golfing experience.

Different hole characteristics

Each hole should have different characteristics to add complexity to the game. Features that add characteristics to holes include water hazards, fairway and greenside bunkers, and natural obstructions. Each green will offer a different set of problems to be solved and this can change daily depending on pin position and speed.

Challenging Rough

Grass in the fairway should be mown carefully and uniformly. Alongside the fairway is the rough with longer grass that can be difficult to hit out of.

Top ranking clubhouses

After a round of golf, players love to have a place to rest and cool down. The clubhouse and its facilities complete the whole golf experience. Lounge areas are perfect for discussions between players after a game. The quality of food and service are also vital factors that keep players coming back for more. These world-class clubhouses in Charlottesville’s golf communities are also available for other residents to hold private affairs and events like meetings, family gatherings, parties and the like.

There is a lot to love and experience in Charlottesville. If you want to know more about these neighborhoods and other homes for sale in Central Virginia, visit www.CharlottesvilleGolfCommunities.com

Call me, Pam Dent, today at (434) 960-0161. I have the professional and expert knowledge of the local housing market of Charlottesville including horse farms, golf communities, and other homes for sale in Central Virginia. It is my pleasure to guide you through the exciting and fulfilling journey of finding your dream home.

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3 Things a Golfer Can Do in a Charlottesville Golf Community to Stay Sharp

If you are considering to buy a home in a Charlottesville golf community, you will not be disappointed, particularly if you are a golf enthusiast. The golf communities are the perfect place for golf lovers like you who desire to pursue an active lifestyle by engaging in sports regularly.

Instant access to the sport you love is only one of the highlights of living in these neighborhoods. These communities also offer world-class amenities such as fitness centers, clubhouses and other sports facilities such as tennis courts, swimming pools and basketball courts. You will also have the pleasure and convenience of being in close proximity to everything you need such as shopping centers, dining places and other outdoor activities.

If golf is all you want, there are other things that can keep you interested in the sport in addition to simply going through a round and playing it. Here are a few ideas to keep you excited about the game.

Warm up for the game

Living in Charlottesville golf communities means unlimited access to golfing. While golf is not a sport like basketball or soccer that involves plenty of running and quick movements, it does hone a person’s discipline and strategic thinking.

Before heading out on the course, players should not disregard the importance of warming up. In order to avoid injury and play your best, it is necessary to make sure that you have given yourself time to warm up before a game. A short walk to get your blood flowing and your body moving would be really good for you. Stretching and warming up prepares your body to swing freely, and also serves as conditioning for the game will last for several hours.

Be a part of a community

Living in a Charlottesville golf community allows you to establish a network of friends you can enjoy playing golf with. You will find yourself surrounded by people who share the same interests as you. Aside from golf, there are additional activities for you to enjoy with all the amenities that these communities offer.

Plus Charlottesville is a town that thrives in the arts, is rich in history and supports its local businesses. There are different events in town that you can explore as you become a part of this wonderful community.

Hone your skills and learn more about golf

Experts and amateurs alike have a lot to learn as they try to master this sport. You will find joy in learning much more through the people you will meet and the network you will build. You will learn a lot about yourself as a player and discover more about the areas you can improve on. Care for a challenge? Try playing in a league. This will give you the opportunity to compete and also to forge new friendships.

The lifestyle that these golf communities offer is something to look forward to. There is definitely nothing more exciting than life in the fairways. For more information, visit this website today for more information www.CharlottesvilleGolfCommunities.com.

Call me, Pam Dent today at (434) 960-0161. I can assure you of the best quality service. I have the professional and expert knowledge on Charlottesville real estate, local housing market, horse farms and golf communities that will guide you through the exciting and fulfilling journey of finding your dream home.

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What’s On Your Realtor’s Mind

You all know that these days nearly everybody works hard. The increasing responsibilities of life are well documented. So it came as a surprise to a realtor colleague of ours when he was asked by a prospective customer… what exactly is it that you do all day? To be more precise, the way it was asked was “what exactly is it that you Doooo all day?

A bit of questioning allowed our colleague to realize that this customer believed that being a realtor would be so much fun because you’re able to tour all those pretty houses and drive around.

Being a realtor is a great job. Being able to tour those homes has little to do with it. So we thought we’d give you a glimpse at the job description of the duties in One Week In A Realtor’s Life. Our version is condensed in hopes of keeping you from nodding off by the second sentence. This is what’s on your realtor’s mind:

Call seller to verify completion of repairs. Explain what a neighborhood amenity is and verify current HOA fees. Get the disclosure sections signed and delivered on time. Negotiate an offer. Confirm that the loan has been funded. Keep blogging to keep the site active. Answer the phone. Coordinate the timing with the attorney for an upcoming closing. Deliver the HUD form and review for errors. Schedule listing appointments for buyer who’s arriving from out of state. Answer the phone. Maintain yearly continuing education classes. Attend a property inspection with a buyer. Update website county tax information. Prepare comps. Research title information at the courthouse. Answer the phone. Assist with staging and photography of a new listing. Order home warranty. Document and deliver escrow money to broker. Meet the appraiser. Answer the phone. Return missed phone calls. Prepare neighborhood flyer. Place lockbox at new listing. Attend meeting at Board of Realtors. Collect local advertising for relocation package. Recommend hotels. Attend re-zoning meeting.

We don’t need to do these things backwards and in high heels. We just need to do it while we compete with thousands of other realtors, none of whom earn a fee until after a closing happens. And oh yeah… did we mention, answer the phone? (Touring those beautiful homes is icing on the cake).

Transferring Property Prior to Death

Make Your Best Offer First

Virginia Real Estate Predictions 2021