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Allison Simson

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Can a second home qualify for 1031 tax-deferred exchanges

by Allison Simson & Joyce Nenninger
Question: Allison, we’ve heard a lot about 1031 tax-deferred exchanges and would like to know if our second home would qualify for a like-kind exchange with another piece of property that is closer to our home. We have never rented our current property, but consider it an investment due to it’s appreciation the past few years.
Answer: Your question is a good one – and one that has been in the media and in the courts quite a bit in the past few months. To get an accurate assessment of your particular situation, I recommend you speak with a company that specializes in 1031 tax-deferred exchanges. According to Inman News, a similar case to yours was tried in court. Here are the details. In 1988 Barry and Deborah Moore purchased a second home on Clark Hill Lake. It included a home to which the Moores added a deck and other improvements.
The property was a three-hour drive from their principal residence. The Moores and their children visited the property two weekends each month between April and September each year.
But in 1995 the Moores changed their primary-residence location, making the drive to the Clark Hill Lake property a five- to six-hour trip. As a result, they used the property only a few times each summer.
The Clark Hill Lake property was never offered for rent to short- or long-term tenants. On their income-tax returns, the Moores deducted their mortgage interest and property tax payments as personal itemized deductions.
In 2000, the Moores found a five-bedroom, four-bathroom house on 1.2 acres of land adjoining Lake Lanier, just a few hours from their home. It has five screened-in porches, a party deck and veranda.
They decided to make an Internal Revenue Code 1031 tax-deferred trade of the Clark Hill Lake property for the larger and closer Lake Lanier property. They justified the exchange by stating both properties were held for "investment" rather than for personal use.
Upon audit, the IRS denied the IRC 1031 tax-deferral on the sale of the Clark Hill Lake property. The IRS auditor noted the property had never been rented and was used only by the Moore family on weekends. But the Moores argued they held the property as an investment for future appreciation in market value. They took their dispute to the U.S. Tax Court.
If you were the judge would you allow the Moores to defer the capital gains tax on the trade of the Clark Hill Lake property as an investment?
The judge said no!
To qualify for an IRC 1031 tax-deferred exchange, the judge began, both properties involved in the trade must be held for investment or for use in a trade or business. Although the Moores pointed to the appreciation potential of the Clark Hill Lake property, he continued, "It is a taxpayer's primary purpose in holding the properties that counts."
"Property held for investment is property held for the production of income," the judge explained. "We accept as fact the Moores hoped that both the Clark Hill and Lake Lanier properties would appreciate," he noted.
"Mere hope or expectation that property may be sold at a gain cannot establish an investment intent if the taxpayer uses the property as a residence," the judge emphasized. There was no convincing proof either property was held for the production of income as a rental since the family used both properties primarily as vacation retreats, he added.
Because the evidence strongly showed both vacation homes were held for personal use, rather than for production of income, neither property qualifies for an IRC 1031 tax-deferred exchange, and the Clark Hill Lake property sale is taxable, the judge ruled.
Based on the 2007 U.S. Tax Court decision in Moore v. IRC, T.C. Memo 2007-134.
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Don't buy home without checking title report

by Allison Simson & Joyce Nenninger
Liens and easements could make purchase a bad move
How would you feel if you bought a home that seemed perfect, only to find out you couldn't use the property like you thought you could?
One buyer bought a home with a good-sized yard that he thought would be perfect for his large dogs to roam free. Soon after the sale closed, he hired a contractor to construct a fence around the property. The day the work started, a neighbor showed up to inform the new homeowner that he couldn't completely fence the property because of an easement that ran across his property.
An easement grants property rights to someone other than the property owner. Common easements are for ingress and egress, utilities and sewers. Easements must be kept unencumbered.
In the case above, the easement provided the neighbors access to their property. A fence could not be built over the easement because it would deny the neighbor their rights to access.
The property owner had to revise his fence design, which was disappointing. But, easements can be even more problematic, particularly if you assume there is an easement in favor of your property but there isn't.
According to Dian Hymer of Inman News, A homeowner in the Oakland Hills (Calif.) subdivided his property and sold off the lower half to a builder who constructed a new home on it. The homeowner then put his home on the market and entered into contract to sell it.
The buyer's real estate agent reviewed the preliminary title report and found that there were no easements either benefiting or restricting use of the property. In particular, there was no sewer easement.
The agent asked the seller how the sewer line from the house connected to the main city sewer line. It turned out that the sewer line ran downhill across the portion of the property that had been subdivided and sold.
In this case, an error of omission occurred during the subdivision process. A sewer easement should have been granted in favor of the owner of the upper portion of the property. Consequently, the owner of the upper property no longer had a legal right to run his sewer line across the adjacent property.
HOUSE HUNTING TIP: Make sure you have a clear understanding of the title issues affecting a property before you buy it. In some states such as California, title companies check the record and issue a title report that includes such things as the recorded owner and liens, easements and encumbrances affecting the property. In other states, buyers hire attorneys to search the title record and produce a report.
In the aftermath of the subprime lending crisis, it's especially important to investigate the status of any liens secured against the property. A preliminary title report will give you the original amount of such items as mortgages and taxes owed. But, the preliminary report won't necessarily tell you the amount the sellers currently owe.
All liens secured against the property must be paid in full in order for the seller to pass clear title to a buyer. If the seller has an interest-only mortgage and has not made any payments toward retiring the principal amount borrowed, he could still owe the original amount he borrowed. If the mortgage was a teaser-rate adjustable with an option to pay the minimal amount due, the seller could owe more than what is indicated on the title report.
THE CLOSING: Problems that could delay or derail closing can develop when the owner of record is not the same person who listed the property for sale. Before concluding a home purchase, make certain that the seller has the power of sale and that the property you're buying is what you bargained for.
Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.
 
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Using Their IRAs to Make Home Loans

by Allison Simson & Joyce Nenninger
Question: Joyce, I’ve heard about using my IRA to make a loan…can you provide more information? 
Answer: Yes! According to Kelly Greene of the Wall Street Journal, investors can use self-directed individual retirement accounts (IRAs) to write short-term mortgages, primarily to buyers of fixer-upper properties or borrowers in need of bridge loans to cover mortgage payments on their old homes while they wait for them to sell. Most IRA investors impose interest rates of at least 10 percent, though the maximum is set forth by the state. Additionally, they typically do not lend more than 50 percent to 70 percent of the home's value. While some of these investors are willing to help homeowners encountering financial difficulties, others look forward to foreclosures because they can take ownership of properties at a dramatic discount. However, foreclosed properties can cost them so much money for legal fees and repairs that their IRAs could run out of money; and investors then would be forced to obtain a loan or shell out money for the taxes and penalties imposed when IRAs are closed.
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Damned lies and median house prices

by Allison Simson & Joyce Nenninger
Stats are often misinterpreted
Question: Allison, the average home prices in Summit County are very strong, but we notice that we’ve seen lots of different numbers. What should we look at when trying to get average sales price:
Answer: Good question. One of the most commonly referenced statistics in the real estate industry is the median sales price of homes. According to Stephen Bedikian, many articles are published in newspapers the day after the National Association of Realtors releases its quarterly Metropolitan Area Existing-Home Prices report with conclusions about the healthy or unhealthy state of the local real estate market. Unfortunately the median sale price is frequently taken out of context and misinterpreted.
Even someone who slept through most of their math classes will remember that the arithmetic mean and median statistics are different for the same data set. The average is the sum of the numbers divided by however many numbers you started with. The median is the number in the middle, when the numbers are listed in order.
The reason that the mean or average sale price for a market area can be misleading is intuitively obvious and that's why it's rarely cited. A few sales in the extreme luxury segment of a market -- think $30 million or more in Bel Air -- can push up the average for the entire local market area.
The median sale price can also be misleading particularly in down markets. Let's consider the San Francisco market. The median home price reported by NAR in the first quarter of 2007 was $748,100. In the second quarter it was $846,800 -- a jump of more than 13 percent. Wow, that appears to be a sure sign of a healthy market. Or is it?
To get a truer picture of market conditions, let's consider a few more statistics: price indexes (using a repeat-sales price methodology), the number of sale transactions, price reductions and inventory growth. From April to June 2007, the S&P Case Shiller Home Price Index showed a decline of just less than 1 percent, not an increase of 13 percent. Likewise the home-price index published by OFHEO showed a decline of just less than 1 percent for the second quarter. The S&P Case Shiller index covers only resale transactions while the OFHEO data covers multiple sale types but only for conforming loans.
FIS Data Services reports that sale transactions increased about 25 percent between the first and second quarters, which is to be expected given that period corresponds to the spring selling season. However, according to Altos Research data, the market inventory level increased almost 40 percent during the second quarter and the percentage of houses listed with a price reduction increased from about 33 percent to 43 percent.
So what actually happened? Sales transactions increased with a greater proportion on the high end versus the previous quarter. There appears to have been little actual appreciation as evidenced by the Case Shiller and OFHEO numbers, while inventory increased and prices of many listed properties were reduced. So next time you read that median house prices have increased in your area, don't celebrate prematurely. Conduct more research before you reach a conclusion about market conditions in your area.
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Homeowner’s living trust became nearly worthless

by Allison Simson & Joyce Nenninger
Homeowner makes big mistake after refinancing
I recently came across this article by Bob Bruss that I thought would be extremely helpful to anyone who owns property in a living trust. It’s a good reminder to pay attention to the trust a regular intervals.
“Nobody, including me, likes to think about death. But it is inevitable, as I was reminded during a recent hospitalization for major surgery. Thankfully, because of the excellent surgeons, nurses and my friends, I came through the experience successfully.
After I recovered, I learned from the doctors I had been very close to death. When I got home and was feeling better, one of the first things I did was review my estate plan.
In the process, I discovered my old living trust had become nearly worthless. The primary reason was, like most real estate owners, in the last few years I refinanced my properties to take advantage of lower mortgage interest rates. As part of the process, the lenders required me to take my property titles out of my living trust, record the new mortgages, and then put the titles back into my living trust.
But I carelessly didn't follow up and the title companies failed to re-deed my properties back into my living trust. The result was my living trust had become virtually empty because it was "unfunded." If I could make that mistake, think of how many other homeowners and realty investors also have worthless, empty living trusts.
Especially because I wanted to revise my estate plan and change my beneficiaries, I decided to hire a trusts and estates attorney. The total cost, including recording fees, was about $1,300. That is far less than the 3 to 10 percent of gross assets it costs to probate a typical estate.
Frankly, although I am an attorney and could prepare my own living trust to avoid probate costs and delays, I'm glad I hired another attorney.
Among the extra improvements he suggested were (1) a durable power of attorney for lifetime asset management (in case I become unable to manage my assets); (2) a "living will" (also called an advanced health care directive) so the designated person can make health care decisions, such as taking me off life support if there is no reasonable hope for recovery; and (3) a "pour-over will" for any assets omitted from my new living trust. The attorney also made certain all my property titles were correctly transferred to fund my living trust.
EVERYBODY NEEDS A WILL. Shockingly, less than 20 percent of U.S. residents have a written will. For those who have a will, after they die their assets will be distributed according to their wills by the local Probate Court. Probating an estate, even a modest one, usually takes six to 18 months or longer before the heirs can receive their inheritances.
For individuals who die without a written will, the state law of intestate succession determines who will receive their assets. Especially in second marriages, the result is often not what the decedent would have wanted. Again, the local probate court supervises intestate succession distribution, subject to costs and delays.
However, if no written will and no relatives can be found, a person's assets "escheat" to the state. That means the probate court will sell the assets and deposit the proceeds into the state treasury. That is not the result most people want.
HOW TO AVOID PROBATE. Even if you have a written will, it usually won't avoid probate costs and delays. Well-known methods of probate court avoidance include holding real estate titles in joint tenancy with right of survivorship (or as tenants by the entireties between husband and wife) and holding bank accounts or stock brokerage accounts with "payable upon death" designations.
But all these methods have major drawbacks, especially when two or more persons own an asset but one becomes incapacitated such as by Alzheimer's disease, a coma or a severe stroke.
A better alternative to avoid probate costs and delays for most individuals is a revocable living trust. This is simply a method of holding title to major assets, such as a home, investment property, bank accounts, common stocks, mutual funds, and other major assets.
When a living-trust grantor creates a living trust, he is its initial trustor, trustee and beneficiary. That means he can buy, sell, refinance and manage the assets as before.
However, if he becomes incapacitated, then the named successor trustee, such as a spouse or adult child, takes over management and can even sell the assets if necessary. There is no necessity to have a conservator appointed by the probate court. Husband and wife can either have individual living trusts or a joint living trust.
After a living-trust grantor dies, the successor trustee then distributes the living-trust assets to the individuals and/or charities named in the document. The local probate court does not become involved, so distribution usually is completed within six months.
ADVANTAGES OF LIVING TRUSTS. Among the many advantages of a revocable living trust are (1) easy amendments or revocation as desired by the trustor; (2) ownership benefits remain unchanged, including income-tax deductions and the principal-residence-sale tax exemption; (3) avoidance of multistate probates if real estate is owned in more than one state; (4) privacy because living trusts do not become public, as do written wills filed for probate; (5) the successor trustee manages the living-trust assets if the trustor becomes incapacitated; and (6) the successor trustee distributes the assets after the grantor's death.
DISADVANTAGES OF LIVING TRUSTS. Among the few disadvantages of revocable living trusts are (1) no statutory period to limit creditor claims (as occurs in probate court); (2) the cost and inconvenience of "funding" the living trust (usually far less than the cost of probating an estate); (3) when refinancing mortgages, lenders usually require taking real estate out of the living trust for a moment while the mortgage papers are signed and recorded; and (4) a living-trust trustor needs a "pour-over will" or a "back-up will" for any assets that were not included in the living trust.
SUMMARY: Revocable living trusts offer many advantages and few disadvantages to avoid probate costs and delays for heirs as well as conservatorship during the grantor's lifetime.
By avoiding involvement of the local probate court, living-trust beneficiaries usually receive their assets within six months after the decedent's death. More details are in the new special report, "Pros and Cons of Living Trusts to Avoid Conservatorship and Probate Costs and Delays for Your Heirs," available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.”
 
 
For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.   

Things to know before buying a vacation home

by Allison Simson & Joyce Nenninger
Question: What are some of the major items one should consider before buying a vacation home?
Answer: According to Inman news reports, market conditions, taxes and hazard insurance are among the top concerns for buyers of second homes. Although there are other considerations.

Nationally, home sales declined 4.1 percent in 2006 from 2005. But, vacation-home sales rose 4.7 percent in 2006 to a record 1.07 million sales, according to the National Association of Realtors (NAR). The increased interest in buying vacation homes for personal use rather than rental is expected to continue throughout this decade.

The annual Investment and Vacation Home Buyers Survey from NAR found that vacation-home buyers intend to hold on to their property for a median of 10 years. Thirty-eight percent of respondents plan to keep their property for 11 years or more.

With a long-term horizon in mind, it's important to make sure that the home you buy lives up to your expectations. To complicate matters, residential real estate is an intensely localized business. Many vacation-home buyers buy outside of their local area.

The NAR survey revealed that the typical vacation-home buyer in 2006 bought a property that was a median of 215 miles from his or her primary residence. Forty-two percent bought a vacation-home within 100 miles of their home; 32 percent of the properties were 500 miles or more away.

Even vacation-home buyers who purchase within 100 miles of their primary residence are likely to find that real estate custom and practice might differ considerably from what they're used to. And market conditions are so variable today that you can find different forces at play even within one community.

Buying outside of your local area requires diligent pre-purchase investigations to make sure that you end up with a home that brings you pleasure. Here are the sorts of things you should look in to:

Check out the condition of the local market. Is it a buyer's or a seller's market? If the area is flooded with inventory, find out which homes are selling and why. You usually can't go wrong if you buy the type of home that is in high demand. It may be worthwhile to wait for such a property to come along.

Are there any natural hazards to be aware of such as forest fires, flooding or hurricanes? Can you get insurance for these hazards to protect your investment?

If you're buying in a rural community and you've experienced only urban living, you may need to familiarize yourself with such things as septic systems and percolation tests.

With this in mind, you'll probably have the best success if you choose a real estate agent from the local area to represent you in your vacation-home purchase. Ask acquaintances who own in the area for recommendations. Or, have your real estate agent at home find a competent agent to work with.

After you decide on an agent, ask for a list of all the fees that will be levied in connection with your out-of-area purchase. For example, some communities have transfer taxes and others don't. Find out how much your property tax will be and how much they are likely to increase over time.

Buyers who purchase a vacation home a long distance from home should investigate what local resources are available for property management. You may purchase in a planned-unit development that includes onsite management. If not, can you hire someone to look after your property when you're not there?

It's a good idea to take a few vacations in the area where you think you want to buy -- and at different times of year -- before you actually purchase. You may find after spending more time there that you really don't want to own a property that you may only visit infrequently.

THE CLOSING: It might make more sense to continue renting if you plan to spend only a week or so a year there.

 

 

For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Finding perfect house is all about timing

by Allison Simson & Joyce Nenninger
Question: Allison, We want to buy a home in Frisco, Colorado, and have been looking for only a week or so.  Our Realtor tells us the second home market in Summit County- and especially Frisco is moving very briskly and we’ll have to act quickly. My question is, have I been looking long enough?

Answer: It's not uncommon for buyers to look for six months or more before finding the right house or condo to buy. Sometimes, it takes even longer if listings are in short supply. Lucky are the home buyers who find a great property that suits their needs soon after they start their search. But, finding the right property earlier than anticipated can pose a problem for some buyers.

Common concerns are: Have I looked long enough to understand the local market and the range of housing options available? Could there be another, even better listing on the market, perhaps at a better price? Will an upcoming listing be more appealing? Should I wait and see what else might come along, or should I go for it?

HOUSE HUNTING TIP: Don't pass over an ideal property just because you found it quickly. Instead, complete due-diligence investigations to satisfy any concerns you may have about the property before you make an offer. You could regret it if you don't buy the listing and it takes years to find another suitable property.

First, search the Internet, if you haven't already, to see if there are similar listings on the market in the area where you want to live. Ask your agent to show you as many of these as possible, unless you can rule out a listing based on your criteria without having to a look at it.

For example, you may need a main-floor bedroom and bath for an aging parent who visits frequently. You can usually get a sense of the floor plan of a house from the information provided on the Internet. If critical information isn't provided online, your agent can check for you. Look at as many homes as possible that might suit your needs. This will help you to decide whether to go ahead or wait for something better.

A critical variable to consider before making your decision is how often listings like the one you're considering become available. Ask your agent to provide you with a list of similar listings that sold within the last six months or one year.

You won't be able preview these listings. So, ask for your agent to give you as many details about the properties as possible, including how long they took to sell and whether they sold for more or less than the list price. You might want to drive by the listings so that you can at least get a curbside impression of how they compare with the listing you're considering.

You may find that listings similar to the one you like come along frequently. They don't sell quickly and rarely for over the list price. In this case, there's no urgency to buy quickly.

However, if you discover that listings like the one you covet come on the market infrequently, you should seriously consider going ahead with an offer. Certain kinds of properties in certain areas are always difficult to find. An example would be a charming home in move-in condition in a popular neighborhood that is within walking distance of great restaurants.

When these homes come on the market, there is often pent-up demand. You may not be the only buyer who has been waiting for just such a listing. This means that you could end up paying more than the asking price if you end up bidding in competition with other buyers who want the same kind of a property you do.

THE CLOSING: Don't pass up a good listing because you don't think you know enough to make an informed decision. Instead, accelerate your due-diligence investigations so that you are prepared to make an informed decision.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.


 

For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

SecondSpace enters second-home market

by Allison Simson & Joyce Nenninger
Venture-backed startup launches two Web sites targeting second-home owners

According to Elizabeth Sweesy, SecondSpace, a Bellevue, Wash.-based Internet startup backed with venture funding, launched two real estate Web sites today targeting the growing vacation homes market.

With LandWatch.com and ResortScape.com, the company aims to connect people to their next second home or land for sale and also to provide information about local services in the towns where their properties are located.

SecondSpace was founded last year by two Internet veterans -- former Classmates executive Anil Pereira, and former Microsoft technical leader Alok Sinha. The team received $6.5 million in venture capital from Ignition Partners and an undisclosed partner last July.

The second-home market includes some 43.8 million owners, according to Census Bureau data, and SecondSpace hopes to fill a niche with what it calls a "lifestyle marketplace" to give consumers all the information they need for their "home away from home."

"The whole idea is to give people second lenses," said Pereira, president and CEO of the startup. With the average second-home owner either looking for or already owning a home that is located at least a few hundred miles away from his or her primary residence, he said, "We started to realize there's this geographic and temporal disconnection between owners and communities."

Second-home sales accounted for 36 percent of all existing-home and new-home sales in 2006, down from a 40 percent share in 2005, according to the National Association of Realtors' latest research. Investment-home sales dropped from a 28 percent share in 2005 to a 22 percent share in 2006, while vacation-home sales rose from a 12 percent share in 2005 to a 14 percent share in 2006.

Second-home markets are more about lifestyle, Pereira said, with the activities and atmosphere taking priority over the home itself in most cases. So the company started out trying to pull those considerations into its search technology.

While on ResortScape.com, for instance, a person looking for "skiing in Vermont" will see a number of property listings in skiing areas of the state, but may also get suggestions for properties near ski resorts in similar areas.

The sites also offer information on local service providers for homeowners who live out of the area but need information on local plumbers, landscaping or maintenance providers, for example.

"You don't necessarily need to know what you're looking for," said Sinha, chief technology officer of SecondSpace. He further explains that with the sites' semantic searching, a person who enters "50 acres in Montana" will also be able to see results for 52 acres of land or 49 acres in Montana.

Competitors in the online second-home market space include HomeAway.com, which is more focused around connecting vacationers with homes that are for rent, and EscapeHomes.com, which offers to connect buyers with second homes.

SecondSpace generates revenue by charging real estate brokers a $50 monthly subscription fee to have their property listings included in searches on the site. The company also builds custom sites for developers and sells data about second homes.

The site is free to consumers and the listings for local service providers are currently free, though that may change in the future, Pereira said.

The chief executive also said that SecondSpace plans to expand into other verticals, but will still target the same 39- to 60-year-old consumer demographic -- the baby boomers searching for second homes.

The company offers brokers several ways to upload listings, as well as analytics to show who's looking at which properties on the sites.

 

 

For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  

Boomer 'Elites' Will Pay a Premium for Homes

by Allison Simson & Joyce Nenninger

Question: Of course, we’ve all heard the term “Baby Boomers” but I recently heard the term “Boomer Elites”. What is that?

 

Answer:  Good question! Baby boomers are touted as being the wealthiest generation in U.S. history. But only one in 10 are considered affluent, according to a recent study conducted by Focalyst, a market research firm that is a joint venture of AARP and the Kantar Group. Of the more than 30,000 U.S. adults over the age of 42 who participated in the study, only 9 percent (or one in 10) have an annual household pre-tax income of $150,000 ($100,000 if retired).

Home ownership is important for this financially savvy group, which Focalyst dubs “Boomer Elites.” The study finds them well prepared for retirement; 95 percent (compared to 75 percent of all boomers) have some sort of savings or investments.

They consider their home as an investment, according to Heather Stern, director of marketing for Focalyst. The average home value for this group is $519,000 compared to $282,000 for boomers overall

Not only do almost all Boomer Elites own their own home, but they are more likely to own multiple homes. Approximately 21 percent of the Boomer Elites own at least two homes, and 7 percent said they plan to purchase an additional home. Among all boomers, only 8 percent own a second home and 2 percent plan to buy a second home


 

For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours. 

Question: We’re in the process of applying for a mortgage to finance our second home in Wildernest.  With all the mortgage turmoil that is going on, do you have any suggestions about getting the right loan?

Answer:  The mortgage market is undergoing some “remodeling” right now, but it’s not necessarily cause for alarm.  There are still some great loan products out there, and according to Ilyce Glink with Inman News, when it comes to shopping for a mortgage, the most important thing to remember is that the best loan for you may not be the cheapest loan you're offered, or the loan with the cheapest monthly payments.

The loan you choose needs to work for your personal finance situation not only on the day you close, or for the first year, but for the entire time you plan to live in the property and keep that loan.

In the past few years, hundreds of thousands of buyers have flocked to subprime loans like moths to flame. Even those with perfect credit found themselves signing on the dotted lines for loans they thought offered an interest rate of only 1.99 to 3.99 percent, as opposed to the 6 to 7 percent those loans were actually carrying.

Choosing the best loan means you have to take the time to understand both what your needs are, and what kind of loan will meet those needs. Do you want the stability of a fixed-rate loan? A loan that is part fixed, part adjustable? Or are you a risk-taker who might benefit from an adjustable-rate mortgage (ARM)?

Once you decide which loan you want, here are some tips for negotiating for the best deal:

1. Know what you want before you call the lender. The mortgage market is extremely competitive for conventional loans, that is, for loans that are $417,000 or less. To find lenders, you can look at BankRate.com, but you should also ask your real estate agent to recommend several lenders her clients have worked with successfully. Ask your friends who they worked with, and don't forget to check out the biggest national lenders, including Bank of America, Countrywide Financial, Wachovia and Chase, as well as local banks.

2. Consider using a mortgage broker. Brokers often have access to more than a dozen end lenders, and their job is to do the shopping around for you. Just don't be fooled into thinking that the mortgage broker is on your side. Mortgage brokers are paid by the end lender (the practice is called a "service fee premium"), and they receive a higher fee if they sell you a more expensive loan. So, choose a reputable mortgage broker and ask him to disclose in writing what his fee will be from the end lender.

3. Stay on top of interest rates. Interest rates change frequently during the day. If you decide to float your loan, watch the bond market activity closely. If rates seem to be dropping, you'll be able to react quickly and call in your lock. (Be sure to get confirmation in writing that your loan has been locked and at what interest rate.) Many lenders will offer you the opportunity to reduce the interest rate on your loan at least once between the time you apply and the closing date. You may want to look for a loan that offers this feature.

4. Watch the points and fees. The number of points and fees can change as frequently as interest rates, as lenders struggle to stay competitive with each other. You may see zero-point, zero-fee loans being offered, but lenders will often give you a lower interest rate in exchange for paying points and fees upfront. This may sound good, but you're effectively financing those points and fees over the life of the loan. As we went to press, Bank of America was offering loans at competitive interest rates without any points and fees. Other lenders may offer similar programs. It pays to shop around, particularly if you can save $3,000 to $8,000 or more on the purchase of your home.

5. Don't be afraid to ask for what you want. In a buyer's market, lenders are hungry for business. If you ask them to reduce the fees (without raising the interest rate), they may well do it. Ask each lender you're working with to provide you with a detailed listing of the fees and charges for your loan. Then, you can compare lenders on an apples-to-apples basis. Then, go back to each lender and ask for the elimination of specific fees. Basically, you're asking the lender to bid on your business. It's takes moxie, but is perfectly doable.

6. Consult with your real estate attorney before you apply for the mortgage. Although attorneys aren't used in every state to help buyers and sellers close on their homes, I believe they provide a useful service. (Full disclosure: I'm married to a real estate attorney.) If you live in a state where real estate attorneys are used, you'd be smart to consult with yours before you apply for your mortgage. Real estate attorneys who do a lot of house closings will be a tremendous source of information about good home inspectors, title companies, and mortgage lenders. They can give you resources, point you in the right direction, and help guide you to a successful house closing.

 

 For answers to your real estate questions, call Allison at 970-468-6800 or 1-800-262-8442. Email - [email protected] or visit their web site at www.SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field.  Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.   

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Summit Real Estate
The Bright Choice
330 Dillon Ridge Way, Suite 10
Dillon CO 80435
970-468-6800
800-262-8442
Fax: 970-468-2195

Allison Simson, Owner/Broker, is a licensed Colorado Real Estate Broker