How to Acquire Wealth Through Capital Gains Exclusions

Using capital gains exclusions is a useful way to acquire wealth through real estate.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

In the state of California, if you own a house for less than 24 months, you’ll be hit with a short-term capital gains tax and all of the capital appreciation you’ve accrued will be taxed for as much as 34% or higher based on your tax bracket.

Because of that rule, it’s very important that you understand how to take advantage of capital gains exclusions (or IRS Code: Section 121).

First, you must understand the ownership principle of capital gains exclusions, which states that you must have owned the house as a primary residence for at least two of the last five years you’ve owned the property.

This is one of the secrets of how high net-worth individuals accumulate a lot of cash using real estate as a vehicle.

The second thing to consider is the frequency of using capital gains exclusions. This is something you can do every two years. For example, if you buy a house, wait 24 months, and then sell it for—say—$400,000, you can get an exclusion for that entire sum if you’re a married couple. Remember—married couples can exclude up to $500,000, while single persons can only exclude up to $250,000.

You can then defer your taxes, roll that into your next investment property, and start the process all over again.

If you have any questions about this strategy or any other real estate topic, please don’t hesitate to reach out to me. I’d be happy to assist you.

3 Things to Consider Before Listing in Silicon Valley

When preparing to sell your Silicon Valley home, consider these three things carefully first.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

If you're getting ready to list your home on the market, there are three things you must consider first.

1. Where to start with renovations: Research from the National Association of Realtors shows that renovating bathrooms returns 58% of the value you invest in them, and a new roof can return 105% of the value invested.
2. Paint: Zillow states that painting your kitchen yellow returns $1,400 more than a white kitchen and that lavender dining rooms return $1,122 more than a white dining room. It's an easy way to put a little more money in your pocket when you sell your home.
3. Technology: Because of the area we live in, smart home technology is very attractive to buyers. Some of the best ideas are cheap fixes that add a ton of value, like a Nest thermostat, Amazon Echo for the sound system, and a door lock for all the doors.

If you have any other questions about preparing your home for the market or the Silicon Valley market in general, don't hesitate to give me a call or send me an email. I'm always happy to help!

Why Selling FSBO Doesn’t Make Sense

Selling your home on your own isn’t the best idea. You might save the 6% in commission, but you’ll give up a whole lot more money elsewhere.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

Why should you hire a real estate agent as opposed to trying to sell your home on your own? There are three specific reasons that we would like to share. You may think it’s a good idea to sell your home FSBO (For Sale By Owner), but here are three reasons why it’s not:

1. FSBO homes fail 75% to 95% of the time. Those that end up selling are sold for a fraction of their true value. The NAR stated last year that homeowners have lost an average of 17% on their sale prices because they are trying to save 6% on commission.

2. Owners aren’t agents. In terms of preparing and marketing the property for sale, showing it, and negotiating the best deal possible, it’s a full-time job. Most homeowners don't have that kind of time to dedicate to a sale.

Hiring an agent saves you time and money.

3. It saves you time and money.

If you have any questions for me about selling your home or anything else related to the real estate market, I would love to hear from you. Give me a call or send me an email today. I look forward to hearing from you.

How We Make Homebuying Easier

The Silicon Valley real estate market is extremely competitive. Here’s how we can help you get an edge.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

Why does working with the Vanka Group make a difference when buying a home in Silicon Valley? There are three main reasons.

The first thing is our needs analysis. It’s the first thing we do with our buying clients. It’s so important because every client is different. Some buyers want a certain home in a certain area no matter the price, and some have a budget they have to stick to. Because of that, this meeting is essential in setting your expectations for the process as a whole.

55% of homebuyers are paying with cash.

Secondly, we understand the market. In Silicon Valley, 55% of homes purchased last year were cash transactions. If you’re going to be competing with cash offers and you’re using financing, a pre-approval is essential in getting all your ducks in a row. We have some amazing lender partners we can refer you to.

Finally, the last step is to identify the neighborhoods that are good fits for you. We can strategize with you and help narrow down the best options, whether you want to be near good schools, the highway, or both.

If you have any other questions, don’t hesitate to give us a call or send us an email. We look forward to hearing from you soon.

Should You Be Worried About a Market Correction?

Investing in real estate is a smart move, especially here in California. Here’s why.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

The question of “Are we headed toward a market correction?” is one of the most common inquiries I’ve been getting lately. So today I am going to talk about the three things you should be focusing on if we are indeed headed toward a correction.

First, make your investments with a five to seven year outlook. With a long-term plan, you’ll be just fine.

Secondly, California real estate has historically appreciated for over 7% if you hold the asset for at least five years.

Real estate is a recipe for building wealth.

Finally, the power of compounding. Real estate is one of the only asset classes that you can invest in with as little as 10% down. You can buy a million dollar asset for $100,000 in cash value and when you combine that with the fact that homes appreciate so rapidly around here, you have a recipe for building wealth.

If you have any questions for me or you’re looking to get into real estate investing yourself, give me a call or send me an email. I’d be happy to hear from you.

What Makes Zillow’s Estimates So Inaccurate?

Zestimates and other online home value calculators should be taken with a grain of salt. Here’s why.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

When I go on listing presentations, home sellers always ask me about the disparity between Zestimates and what homes actually sell for. Zillow will give their home a certain value, but the National Association of Realtors states that homes sell for 5% more or less than their Zestimate more than 67% of the time.

There are a couple main reasons why this happens. The first thing you have to understand about a Zestimate is that it’s an algorithm, or a formula-based estimation. It only calculates general information like the square footage of the house and the previous sales in that house’s particular zip code. As we know, houses are imperfect. Zillow doesn’t take into account things like the wear and tear from your kids or your pets.

Details play a huge part in a home’s true value. For example, in Silicon Valley, schools are a big factor in determining home prices. Two identical houses in Cupertino that are right across the street from each other could be as much as $200,000 apart in value just because one house is assigned to Lynbrook High School and the other is assigned to Monte Vista High School.

Zestimates should only be used as a guiding tool for pricing your home.

With all this factored in, it’s really important that you use Zestimates and other online calculators as merely a guiding tool. If you want to know the exact value of your house, you should ask a professional real estate agent who knows your neighborhood well.

If you need an estimate of your home’s value or you’re looking to buy or sell, don’t hesitate to get in touch with us. We’d be glad to help.

Should You Sell During the Spring and Summer?

When should you put your home on the market? It turns out spring and summer are great options for a couple reasons.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

When is the best time of year to sell your home?

Redfin, which is the largest real estate portal, has stated that homes sold in the spring and summer sell 9% faster and for 1.2% more money. There are a couple of reasons for that.

Spring and summer are great times to sell your home.

First, families that are looking to move want to wait until their kids are out of school. They don’t want to deal with the hassle of having to change school districts in the middle of the year, so selling during the spring and summer is ideal.

Second, interest rates are beginning to rise. Buyers are getting off the fence because they want to lock in the low interest rates that we have right now.

If you’re looking to buy or sell a home or if you have any other questions, feel free to give me a call or send me an email. I look forward to hearing from you!

3 Tips for a Smooth Escrow Process

When you sell a property, you can help yourself out in the escrow process by following these three steps.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

When you sell your house and get a ratified contract, taking these three steps will help you have a smooth escrow process:

1. Disclosures. As soon as the contract is ratified, the seller has to provide a certain amount of disclosures. The two most important ones that sellers should really take their time filling out are the seller supplemental checklist (which has to do with the seller's knowledge of all the items in the home) and the transfer disclosure statement, which outlines what is and isn't included in the property. Say you have a chandelier that's a family heirloom that won't be included with the house—you'd need to include that in the TDS.

2. Mortgage process. The appraisal is a big hurdle we need to get past. Typically, we want the appraisal to be at or above the purchase price so that the bank will approve the loan.

The title search ensures the property doesn't have any liens on it.

3. Closing. In the state of California, there are a lot of things we've got to make sure we pass clearly. The first item is the title search; we want to make sure we're up front and clear about any liens on the property or anything that would prevent us from giving a free and clear title to the buyer. Next comes title insurance, but if you work with our team, we take care of it ahead of time so you can be ahead of the curve. Then comes the funding part. About one or two days before the close of escrow, the bank will put the money into the escrow account, so you need to make sure this is done. Lastly, we have the final sign off. Schedule some time to sign off with the title team before you leave to celebrate selling your home.

If you have any questions about the escrow process or you're thinking about buying or selling a home in the Bay Area, give us a call or send us an email. We'd love to help you!

3 Tips to Sell for Top Dollar in the Bay Area

When you sell your home, following these three steps will help you net the most money possible on your sale.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

When you sell your home, following these three steps will help you net the most money possible.

1. Staging. The National Association of Realtors has statistically proven that homes that are staged and displayed with great photography (and video) net up to 6% more than houses that aren't.

2. Mega open houses. This is something I share with sellers in our very first consultation. Any buyer who is serious about buying your house will take three showings. The first is typically online (remember, amazing photos and videos are important!) and the second typically happens when a buyer drives around the neighborhood to see if it's one they'd want their family to live in. Can their kids go play at the park? Is this where they'd like to go buy groceries? The third and final showing for motivated buyers is the “mega open house” when they come visit it in person. We hold these mega open houses for all of our sellers, and they are a giant party! We have food, champagne, wine, and beer, and we make it a great experience. Motivated buyers will possibly look at four to eight houses in a given weekend, so we want to be the house that sticks out in their mind.

Buyers will look at up to eight houses in a given weekend, so we want to be the home that stands out.

3. Inspections. When a buyer looks at a home, they like to know that all the little issues have been addressed up front. As a seller, we ideally like to have inspections up front, like the property inspection, termite inspection, and a chimney or pool inspection if the home has them.

If you have any questions about this topic or you're thinking of buying or selling a home here in Bay Area, give me a call or send me an email. I'd be happy to help you out!

3 Tips for Increasing Pre-Sale Value

If you’re selling a house, there are a few smart investments you can make that will actually net you more money in the end.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

When preparing your house for sale, what can you do to it that brings the best return on your investment?

I put together a list of the best things you can do in our market here in the Bay Area.

1. Declutter the house. Your personal ornaments might not be things that buyers are looking at or place value in. Decluttering and making the house as bright as possible will make it look larger.
2. Paint is gold. Think neutral colors on your interior walls for a clean look to increase the value of your home. At the end of the day, it will return more money on your investment.
3. Flooring. New carpet might be one of the cheapest and most effective ways to get more money out of your sale. If you have hardwood flooring, be sure to clean it up and polish it. We have great vendors for these resources that give our clients special pricing on things like flooring. We’d be happy to put you in touch with them.

New carpet might be one of the cheapest and most effective ways to get more money out of your sale.

If you have any other questions about ways to get the most value out of your home sale or you’re thinking about buying a new home, give me a call or send me an email soon. I’d be glad to help.

3 Home Buying Costs You Might Forget About

Owning a home requires more than a mortgage payment. There are always extra costs associated with homeownership.

Buying a home? Click Here to Perform a Full Home Search
Selling a home? Click here for a FREE Home Price Evaluation

Your mortgage payment isn’t the only cost you’ll have when you buy a home. There are certain costs that buyers tend to forget when they are going through the buying process. Here are three extra costs associated with homeownership that you should take into account in your budget:

1. Property taxes. They are paid once every six months in California. However, you can deduct all the property taxes against your revenue line.

“

Property taxes are paid
twice per year.

”

2. Utility bills. When you are coming from a property where you lease with a landlord, they could be covering some of your bills. When you own your own home, you will have to pay those costs out of pocket. I’d budget at least $200 a month for this.

3. Furnishing bills. To furnish a 3-bedroom house, it’s going to cost you $15,000 to $20,000. Don’t go out on a spending spree before the sale is closed and you hold the title. The lender can pull your credit up to that moment and even deny your loan.

If you have any questions for us or you’re looking to buy a luxury property in the area, give me a call or send me an email. I look forward to hearing from you soon.