Category Archives: selling a camp

Ten Reasons to List Your Old Forge Property in the Winter

If you are considering selling a property in the Old Forge area in the near future you may not want to wait until Spring or Summer.  Here are ten reasons this may be the perfect time to list your home, camp or lot.

  • According to Google, more real estate searches happen in January than in any other month of the year. In fact, house hunting searches increase, on average, 39% from December to January!
  • Most Sellers list in the late spring, if you list now, when inventory is low, you will have less competition.
  • We have a list of qualified Buyers that we met this past summer patiently waiting for the right property to come on the market!
  • Some properties show better in the quiet season without the distraction of loud neighbors or boat traffic.
  • Buyers that shop in the fall and winter tend to be more serious Buyers, they aren’t here on vacation – they are here to buy!
  • Looking for something new?  If you sell now you’ll have the opportunity to buy in the spring, when inventory is high, without having the sale of your current property as a contingency in your offer.
  • Some properties have better views once the leaves have dropped.
  • If you are planning on buying a replacement property and your property sells in the near future you may still be able to take advantage of the amazing interest rates being offered right now.
  • If your property is a summer home, showings this time of year won’t impact your lifestyle.
  • We have a lot of winter tourists that visit the area and fall in love!  One of these Buyer could very well be the right buyer for your property!

Buying Adirondack Real Estate: Who Does Your Agent Represent?

“New York state law requires real estate licensees who are acting as agents of buyers or sellers of property to advise the potential buyers or sellers with whom they work of the nature of their agency relationship and the rights and obligations it creates.”    -NYS Department of State

What does this mean to the Buyers or Sellers of real estate?  If you have looked at residential real estate or listed a property in recent years, your agent probably asked you to sign an agency disclosure form.  All Real Estate Agents licensed in the State of New York are required to disclose their agency relationship and present customers with a disclosure form when assisting with a residential real estate transaction.  In my experience, Buyers usually understand that a Listing Agent represents the Seller.  However, many Buyers do not realize that properties are actually listed with the real estate company, not the Listing Agent.  Therefore, every agent with the same real estate company represents the Seller for every property listed with that company.  The Listing Agent is more or less the Seller’s contact person within the office and is often the party that negotiates on the Seller’s behalf.

Does this mean that a Buyer has fallen in shark infested waters when they find themselves looking at a property with an Agent that represents the Seller?  No.  NY Licensing law dictates the following:

“In dealings with the buyer, a seller’s agent should (a) exercise reasonable skill and care in performance of the agent’s duties;  (b) deal honestly, fairly and in good faith; and (c) disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law.”

This means that as an Agent, if I am aware of a problem with the property I must inform the Buyer, regardless of whom I represent.  I can not, however, inform the Buyer of circumstances that would cause the Seller to be unusually motivated to accept a lower offer (without the Seller’s consent).  Here are a few examples “The Sellers are in the middle of a nasty divorce, they’d take just about anything to get rid of this house!” or “This house is listed at $299,000 but they told me they would accept $250,000.”  Sharing this information would be to my client’s detriment and would encourage the Buyer to make a lower offer.  Conversely, Buyers should not give a Seller’s Agent reason to believe they would pay more than their current offer.  Buyers should not disclose circumstances that would cause them to be unusually motivated to buy.  If they do, the Seller’s Agent is obligated to share this information with the Seller.

There are many reasons why a Buyer may have a better experience working with the Listing Agent.  Usually the Listing Agent knows quite a bit about the property as they have had the opportunity to discuss it at length with the Seller.  As an agent, I love the opportunity to assist both parties because I believe it makes for a smoother transaction.  Having another party involved complicates communication and may cause the emotions and concerns of either side to be lost in translation.  Knowing the personalities of those involved, I can usually dissuade someone from making an offer or counter-offer that I know will be ill-received and possibly offensive to their counterpart.  It is critical for a transaction to commence in a pleasant and amicable manner; otherwise the months to follow can be a nightmare for everyone involved.  Since many homes in the Adirondacks are second homes, furnishings and recreational equipment are often part of the negotiations.  It’s much easier to mediate when I have a direct dialog with both sides.  The knowledge that a particular item is of importance to one of the parties allows me to make sure that all parties walk away from the transaction satisfied.  I sincerely believe that Buyers should not be discouraged to work with the Listing Agent on the purchase of real estate.  They just need to have a clear understanding of whom the agent represents.

Does My Vacation Home Qualify for a 1031 Exchange?

It depends.

If you are not familiar with what a 1031 Exchange is here is a brief explanation: 1031 Exchanges allow property owners to defer capital gains taxes on the exchange of “like-kind” properties.  The term “like-kind” means two properties that have the same use (for example investment properties can only exchanged for investment properties not personal residences).  Capital Gains taxes are taxes that you must pay on the income you have earned on the sale of property (above and beyond the amount you invested in the property to begin with). The property that you will be purchasing needs to identified within 45 days of the sale of the original property.  Between the time of the sale and the purchase the funds must be held by a qualified intermediary, not in your personal bank account.  Within 180 days of the initial sale, the transaction must be fully completed.  Time limits are calculated in calendar days not business days.

Back in the day, a property owner could sell one property and buy another property using the proceeds from the sale provided that the properties were like-kind (Investment property for Investment Property, Residence for a Residence).  The property owner would not be taxed on the gains from the sale of the original property.  The rules have changed regarding residences.  These days, when you sell your primary residence, you can make up to $250,000 in profit if you’re single or $500,000 if you’re married, and not owe capital gains taxes.  To be eligible for the full exclusion, a taxpayer must have owned the home (and lived in it as a principal residence) for at least two of the five years prior to the sale.  This raises the question – what happens when I sell my vacation home?

A property that has been held for “investment purposes” can be exchanged for another property being held for “investment purposes”.   Here in the Adirondacks, it is rather common for the owners of vacation homes to end up renting out their camps more often then they use them.  The IRS has been kind enough to create a safe harbor for property owners like this.  If the owner uses the properties for personal purposes for 14 days a year or less (or less than 10%of the days that it is rented in a 365-day period) the IRS considers the home a rental property, not a personal-use residence, and the house may be eligible for like-kind exchange.  If you rent out the original property for 2 years before and the new property for 2 years after the exchange (and claim the income) both properties are “investment properties”.

Not willing to rent?  Do you use your property more then allowed by this rule?  Remember, you will only be taxed on the difference between the adjusted basis and the sale price of your home.  The adjusted basis is what you originally paid for the property, including debt, closing and settlement costs, plus any qualifying home improvements you’ve made.  I hope that you have kept receipts for your home improvements because they might just be your ticket out of paying Capital Gains Tax.  Those major improvements add up quickly!  The next question you should ask yourself is “Do I really need to make a profit on the sale of this property for it to have been worth while?”  You’ve used it, and hopefully enjoyed using it.  You may find that the current market value of the home does not exceed what you paid for it, a 1031 exchange may not be necessary.

Still have questions?  You may find this link interesting.  1031info