Importance of a Home Inspection

by Sara Seeger 4. March 2014

Home Inspection

Caveat emptor! You may have heard these two Latin words before, meaning “let the buyer beware.” In today’s real estate market, many homes are being sold “as-is.” This clause frees the seller from being responsible for fixing any repairs to the home, no matter how large or detrimental. Whether or not the property is being sold “as-is,” it is important for a potential buyer to schedule a home inspection before going through with the sale for many reasons.

1. Safety

The most important reason for getting a home inspection is safety. Not only does a home inspector check to ensure floors, walls, stairs, and surroundings are all deemed “livable” and safe, a home inspection can uncover health safety issues like radon, carbon monoxide, and mold. Many home inspectors will walk around with the potential buyers and explain to them how to work the instruments in their new home, such as the furnace, and how to operate the gas valve and the main water value.

2. Negotiating Tool

After receiving a home inspection, the potential buyer will receive a home inspection report. This report offers an opportunity for the buyer to request repairs to be done to the house, request a price reduction, or request a credit from the seller. It is important to ask your realtor what requests can and should be made to negotiate a better deal.

3. It Provides an "Out"

A home inspection can disclose important information about the condition of a home and its appliances; thereby allowing the buyer to be aware of potential repairs needed and estimated costs for these repairs, as well as required home maintenance. The buyer can then make a decision to assume the expense or to back out of the offer to purchase the house.

4. Forecast Future Repair Costs

A home inspector can estimate the installation age of major systems in a home like plumbing, heating, and cooling. He can also analyze the existing condition of the home structure. All systems in a house have a “shelf-life.” By understanding when these systems require replacement, a buyer can make important budgeting decisions.

At a minimum, the items below are an important area for an examiner to check during a home inspection.

  • Foundation
  • Plumbing and electrical systems
  • Doors, ceilings, walls and floors
  • Roof, heating and air conditioning
  • Hazardous material concerns, such as asbestos
  • Proper insulation and ventilation

Purchasing a house could be one of the largest investments a person will make in his/her life. For a reasonable fee, a home inspection will provide the buyer peace of mind, as well as information to make an intelligent buying decision.

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Baltimore Housing Market is Heating Up

by Matthew Grayson 24. February 2014

Baltimore Housing Market Heating Up

Even though it is still February and Mother Nature seems to continuously be dumping snow on us, winter will not last forever. As we look forward to emerging from our homes this spring, there are exciting signs that Baltimore’s housing market will be heating up this spring and through 2014!

Baltimore Metro Area - 10 Hottest Housing Markets for 2014

A forecasted median home price gain of 8% through September 2014 (following a 5% increase in the past 12 months) should be exciting news for homeowners who have weathered the storm over the past couple years. This may also help those who have been on the fence about buying to finally have the confidence that the time is right for them. This ranking from CNN Money was compiled by CoreLogic Case-Shiller using forecasting data for the major metro areas.

Economic Factors - 2014 Time to Buy

Along with an expected increase in local home values for 2014, economic factors are continually being reported that support the thinking that the economy is returning to normal and point towards a solid 2014. Industrial production is up and homebuilder confidence is at an eight-year high. Forbes Investment also notes that while mortgage rates are still at historic lows, a slight uptick last summer has created a pent up demand in buyers that will add to the buyer pool this spring and result in positive market activity.

What all this means is that as spring approaches, 2014 is showing signs that residents will be able to move away from any previous fears they had regarding being trapped by their homes. Increased home values and a solid housing market will enable residents to have more flexibility again. Many homeowners will find that they are beginning to have equity in their homes again as values increase.

Homeowner equity will enable those who have outgrown their homes to sell and use the proceeds towards their next home. It will also provide options for those who would like to put their home equity to work for them, to upgrade their home, lower their monthly payment by getting mortgage insurance removed, or invest it elsewhere. And for those residents that are sick and tired of renting and want their own place, increased stability in the housing market and upward value trends will finally allow them to take the necessary steps to purchase their own homes with confidence.

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Tax Prep Tips: What Do I Need to Know to File Successfully?

by Hal Bundrick 20. February 2014

Tax Prep Tips

Filing your 2013 taxes means digging through your calendar, rustling up a bunch of receipts and trying to account for everything that might qualify as a valid deduction or tax credit. To help nudge you in the right direction, here are some legal loopholes you may want to take advantage of.

Remember Job Search Deductions

If you landed a new job last year – in your same occupation – you can generally deduct the expenses that exceed 2% of your adjusted gross income. That can include employment agency fees, resume preparation and mailing – and sometimes travel and transportation expenses. But take note: This doesn’t apply to expenses related to looking for a job in a new occupation – or even a first-time job. And don’t try to deduct expenses that have already been reimbursed.

Another exception to this deduction is one that just doesn’t seem quite fair: You can’t deduct job search expenses if there has been “a substantial break between the end of your last job and the time you began looking for a new one,” according to the IRS.

Maximize Medical Deductions

Unless you were in the hospital or incurred some significant medical expenses last year, a medical deduction is hard to qualify for. But if you have been ill, it can be a substantial tax break. For taxpayers under the age of 65, the medical deduction has risen for 2013 to expenses paid in excess of 10% of your adjusted gross income. Taxpayers over 65 can still claim expenses over 7.5% of AGI, until 2017.

Young Taxpayers Beware

Young adults moving from part-time to full-time employment can often get tripped up in the transition. When filing their first return after getting a full-time job, they may find they owe tax, rather than getting that “bonus” tax refund check from the IRS. After years of claiming “exempt” withholdings on their W-4 they might get caught in a tax trap of insufficient withholdings.

If you are single, claiming yourself as a deduction should hold out the proper amount of taxes, while taking ‘zero’ deductions can often trigger an annual tax refund, depending on your income and individual tax situation. While it’s usually not a good idea to let the government hold your money without earning even a tiny bit of interest, so many taxpayers love their refunds.

Don't Forget Donations

A tax break many Americans overlook: the deduction for clothing and household goods donations.

You can deduct either the cost of the item, or the prevailing fair market value – whichever is lower. If your donation is over $500, you are required to supply more detailed information, including the date of the donation, the original cost and fair market value.

Driving Business Deductions

Business owners need to take every deduction deserved too. Some entrepreneurs just don’t have the time – or the desire – to learn what tax breaks and credits they can earn. If the recession has taken its toll, you may have business losses that can be used to offset other income. And the home office deduction is also a favorite tax break, but can be tricky. These are scenarios when a good tax advisor can be well worth the cost.

If you haven’t been carrying a mileage log in your car, this may be a good time to start. Business miles can really add up, and the IRS allows 56.5 cents per business-purpose mile driven, but taxpayers always have the option of calculating the actual costs of using their vehicle, rather than just using the standard mileage rates.

When Work and Home Expenses Commingle

If you’re a small business owner, or work from home, it can sometimes be a challenge to separate personal expenses from legitimate business expenses.

For example, if you buy something that is used in your business, but sometimes personally as well, you must divide the expense by the proportion between the two. The IRS offers this publication for more information: Publication 535, Business Expenses (Chapter 4).

As you tend to your 1040, you may need a question answered. If so, some local IRS offices offer consultations, and live phone support is available, too. The official website IRS.gov may not be very pretty to look at but offers some extensive resources.

Hal M. Bundrick is a Certified Financial Planner™ and former financial advisor and senior investment specialist for Wall Street firms. He writes about personal finance and investing for NerdWallet. Follow him on Twitter: @HalMBundrick

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