When is it time to sell? For everyone its different. Frequently we begin to consider relocating when:

• We become ’empty nesters’
• We retire
• A major change in health of one or more homeowners
• Loss of spouse
• New opportunities

Really, there is the possibility for great strife in moving, even for young and strong. So much more are the concerns and emotions as the years go by and we have been in one location longer.

Great care needs to be given in how and who assists in the orchestration of relocating those in our circles of great value, that being a mom, dad, neighbor, aunt, uncle, or dear older friend. You should be ready to give acknowledgement to:

• Someones increasing physical &/or mental fragility.
• Their great reluctance to surrender not only the home but so many personal treasured items that may need to be sorted through, sold, donated, or lovingly adopted by others.

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“The house was a symbol of her independence. She was extremely frightened to let it go,” one person said in helping a senior with her real estate transaction.

Nearly 40 % owners over 65 haven’t moved in over 30 years. “For an older person, a home represents their life story.” its been said. Think of holiday gatherings, dinners, or a wall of photos.

There is destination/ relocation planning, tax considerations, seasonal timing to avoid bad weather, coordination of helpers, the list goes on. This is a time to pick a real estate professional with a skill set that fits the situation, think compassion, some experiences with older persons – perhaps an immediate family member(s), and related wisdom is of extra benefit if not sometimes crucial. e.g.:

• In our office one of my assistants is a retired hospice care nurse – has worked with challenging situation involving medical needs and interaction with the children.
• My 96 year old mother was recently relocated to a elder care residence after being independent at a Florida condo for many years. We needed to coordinate 3 children in 3 states to assist in the challenging process.
• We’ve assisted many clients & their family with referrals regarding estate planning, and income tax planning/ filings.

Here are a few suggestions for the children of seniors who want to assist their parents in making a smooth move:

• Show sensitivity when helping seniors sort through their possessions.
• Be careful before committing to the sale of your parents’ extra belongings. Instead, your parents might prefer to donate their extra belongings to a charity they respect, such as the Goodwill or Salvation Army.
• Consider showcasing certain select items at your parents’ next home. The display can also serve to jog fading memories or to spur conversations with visitors.

Yes, I’ve helped folks buy ‘site unseen’. This article is condensed but has some of the basics.

Online photos aren’t enough!
Here’s my ‘must do’ list:

1. Use a local buyer agent that is on retainer/ agreement with you, not just the seller side.
   • I’d advise using a broker that will give you a referral from a client that used said broker more than once!
2. Go ‘live’ on your walk thru. Interactive, voice/ video, tour in real time with your agent (broker) ‘on the ground’.
3. Have an inspector give you feedback. Again, best if your broker/agent is live.
4. Get your trades person that may do upgrades after purchase to give you pre-offer insights in the same way.
5. Solicit immediate and local area videos – real time again is great. Good to do this during a busy weekend evening.
6. View map from above. LOOK for train tracks, land fills, factories, freeways, etc etc…. look look look.
7. Call: local utility for ‘estimate of usage’ for an idea of how weather tight the home is.

Market Value = house specific, current, based mainly on aesthetic appeal (new kitchen, wonderful yard, location, etc.)

Assessed Value = neighborhood average, historical (old), based mainly on exterior mechanics (size/ age).

Now that we have that established, lets proceed.

Whether helping a seller set a price or helping a buyer write an offer, they want to know my opinion. “So how much it the place ‘worth’?”

• A seller always picks a number that is highest – e.g.: ‘Well such n such says my house is worth $bla bla bla’.
• A buyer always picks the lowest number (surprise) – e.g. ‘Well this says its only worth $yada yada.’

Opinion? Not so much, I prefer to provide information. With me & numbers I’ll give you various methods I use & crunch the numbers on YourSpace – YOU choose the value. My accounting & finance degree and nurture of broker fathers background with an economics masters has dictated this style as my preferred approach.

Back to definitions:

1. Assessed =
   • neighborhood average,
   • historical (old),
   • based mainly on exterior mechanics (size/ age).
   • The assessor used a complicated ‘multiple regression analysis’ to take all properties with in the ‘taxing unit’ and give approximate values to the ‘components’ of homes.
     • i.e.: bathroom #1 is worth $2000, bath #2 an extra $600, #3…$250, etc.
     • 1000 s/f = $XX per s/f, 1001-1500 is worth $X per s/f
     • New roof = $XX less $X for each year its been there
2. Market =
   • house specific,
   • current,
   • based mainly on aesthetic appeal (new kitchen, wonderful yard, location, etc.)
   • This
3. , ‘Zillow’ = a computer model spits out this often ‘train wreck’ of a combination of #1 &2.
   • I’ve seen Zillow ‘values’ of $165000 for a home listed at $80k. I’ve seen the opposite, which can confuse a buyer obviously.
   • After all, ‘Zillow’ never walked the neighboor hood, or smelled the basement, or saw the standing water in the spring time.
4. Taxable = as it says. Forget using this number as a value. Your only concern here is if its too high, then you need to protest it.
5. Bigger Picture RealtyNetWorth Value ? = Have you every booked a flight online? Notice it says ‘save money by being flexible with travel dates’, yes? If your timing, tax situation, stage of life, & non-financial intangibles aren’t being considered, you may well need a better qualified ‘resource(s)’.

So whats a wise person to do?

The model I use for buyers and sellers is a spreadsheet approach that uses input from both the assessment – which considers the interaction of house basics, and current market sell prices from ‘as close as possible like-kind’ homes. To use one aspect without the other is a huge absence of a critical treasure of data.

Are we in a bubble market ? Just read from one of my favorite bloggers who boasts: “15 flips currently in progress. 126 flips completed. 15 rentals properties. Follow me to see how I make money in any market cycle.” So here’s the excerpt & my ‘reply’:

• “…Low-money-down loans have been available for decades, and that is not what caused the housing crash. Really bad loans to people who should not buy houses is what caused the housing crisis. …”
• reply: I’m presuming this is a ‘cliff notes’ take on the market since we can’t dispense all knowledge in a post. But my quick 2 cents. As a 2nd generation broker/investor/finance degree holder, bad loans where just a part of the problem. We had funds flowing out of other ‘under performing’ investments…e.g: $’s tend to move from CDs to collectables to stocks to real estate, etc. Further, and this makes the topic more of a localized thing, wages must support prices. Las Vegas had speculators running up prices but buyers weren’t all from out of town so prices couldn’t be sustained. Here in NW Detroit suburbs, we are seeing a lot of new industry coming in and hence price strength above what might be healthy in other parts of MI.

The article goes on to say how the market is not at a bubble stage. I think that greatly oversimplifies. So whats the point I’m making? As in Ecclesiastes 3 “To Everything There is a Season.” With-in 30 miles of each other, I have client investments of which 1 area I feel should be liquidated asap as the appreciation has come fast and peaked, the other could be held for a taxpayer that needs deferred income and no cash flow now, but if cash flow is needed move on. In other words:

• Look at: investor needs (cash, retirement savings, …)
• Investor tax situation
• Investor has more time and abilities or more cash to throw at the portfolio mix
• General economy but also local economic outlook…. very important.

This isn’t like buying a candy bar.

This is not an offer of a guaranteed return. Always do your due diligence before investing.

When/ How/ If: I Should Deed My House to the Kids

There can be some benefits, but also drawbacks to both the gift giver and recipient(s).

(Speak to your accountant/ lawyer/ lender/ and insurance agent for specific advise – the following is excerpts from counsel received and not to take the place of paid advisers in their respective field of licensing.)

Some will:

1. Add the child’s name onto the existing deed.
2. Make an outright gifting over
3. Deed over but reserve a life estate
4. Will the property, i.e: a “transfer on death”.

#1, Possibly Tax Disaster.

• Set up an office visit. There are good reasons, but often more bad reasons to use this strategy.

#2, Outright Gift.

• Irrevocable, the parent loses control and legal right to stay in home. Perhaps the parents will rent back.
• Ends the parent’s right to claim any preferences on property tax bills, e.g.: the homestead exemption, being blind or over 65, hardship/ low income exemptions.
• This can dramatically increase property taxes.
• If real estate transferred to a child is worth more than what was paid to purchase and improve it, then the child pays capital gain tax on the sale of the property. (The $250k/ $500k MFJ primary residence exemption is not applicable unless you own and live in the property).
• Children’s (ex)spouse and creditors may have the ability to seize the property.
• vs. Will at death.
  • If a parent’s Last Will and Testament leaves real estate to a child, parent can change their mind w/ a new will.
• Additional Parent Considerations.
  • To remove the asset for Medicaid qualification, remember that a transfer of your real estate can make the parent ineligible for benefits for nursing home expenses, depending on when you enter the home. The length of time ineligible depends on the value of the real estate, whether it was transferred outright or retained as a life estate. Generally, its a five years look back.

A transfer of real estate is a “gift” and will no doubt require filing Tax Form 709 with the IRS.

#3, Gift with Retained Life Estate.

• During life, the parent has the right to live in the property, and at death the life estate ends. Property transfer effectively at that time.
• Some want to avoid probate after death, and possibly to avoid any court administration of their estate.
• If the recipient child dies first, the child’s share in the real estate could pass to the deceased child’s spouse, rather than to the grandchildren.
  • vs a parent’s Last Will and Testament may provide that an inheritance would go to grandchildren if a child died before the parent.
• The parent still loses a significant degree of control. If the parent sells the property, the proceeds belong to the parent and the child (remaindermen), split according to the percentage of ownership determined by IRS life-expectancy tables.
  • Capital gain tax would be owed by the child on his or her gains.
• If the parent retains a life estate and the property is not sold before the parent dies, then under current law there would be no capital gain at the time of death because its cost basis is “stepped up” to the property’s market value on the date of death. This is a good thing for the recipient !
• For Medicaid, the parent is deemed to own the entire interest in the real estate for five years after a deed execution retaining a life estate. They will also be the owner of the life estate interest thereafter, the value of which is calculated at the time of application for Medicaid.
• RE: inheritance tax, the date-of-death value is taxable to the child – not lovely. But, the child gets a step-up in cost basis (easier if inherited at death in my opinion).

#4, Will the property.

• Call the lawyer. Ok, now, plan for the child to do back flips on how much taxes you just saved him/her/them.

Bottom line.

• The when/ how to transfer should involve your accountant, lawyer, insurance agent, banker/lender at a minimum.

As I’ve told clients for decades: “You’re not dealing with a candy bar.”