New neighbor interested in buying our home too

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Topic Author
hameshatumkochaha
Posts: 187
Joined: Tue Feb 22, 2011 6:33 pm

Re: New neighbor interested in buying our home too

Post by hameshatumkochaha »

Thanks for the input!
mchampse
Posts: 302
Joined: Mon Feb 26, 2007 12:45 am

Re: New neighbor interested in buying our home too

Post by mchampse »

hameshatumkochaha wrote: Sun Jan 24, 2021 10:29 pm Minor update:
I ran into the realtor (neighbor's mother), who offered $500k and no transaction cost (which at 6% is about $30k). Zillow is at $493k currently; so I said, take your time and make an offer that will make us move. Without saying it, I inferred that $500k is not much different than the current market price. If she is indeed interested, she will make a serious offer. If so, I am good to move.
2 quick questions:
1. Curious, if I bought the house at $300k, sell at $500k and have a transaction cost of $30k, isn't my profit $170k once applied to the new house tax-free?
2. Is there a way to pay $30k transaction cost separately and use it for some deduction while rolling-over $200k toward the new house so it becomes tax-free? I guess the answer is no but thought of asking.
I really did not buy this house for "transactions" so did not research this.
Thanks again for your inputs guys!
As promised earlier, I will keep you guys posted.
If you’ve lived there for 2 years, you get a capital gains exemption of $500k which you are well under.

That said, forget about your neighbor and ask yourself do you want to sell your home and move? If you want to sell, find your own realtor and put the place on the market and let your neighbor bid on it along with everyone else. No realtor is ever going to overpay for a home and they may be intending to flip it.

I wouldn’t go with Zillow to determine the value. Get your own realtor who can tell you what the property is worth. Taking her offer because it’s 0 commission is penny wise, pound foolish.
JediMisty
Posts: 917
Joined: Tue Aug 07, 2018 7:06 am
Location: Georgia

Re: New neighbor interested in buying our home too

Post by JediMisty »

mchampse wrote: Sat Jul 03, 2021 6:39 am
hameshatumkochaha wrote: Sun Jan 24, 2021 10:29 pm Minor update:
I ran into the realtor (neighbor's mother), who offered $500k and no transaction cost (which at 6% is about $30k). Zillow is at $493k currently; so I said, take your time and make an offer that will make us move. Without saying it, I inferred that $500k is not much different than the current market price. If she is indeed interested, she will make a serious offer. If so, I am good to move.
2 quick questions:
1. Curious, if I bought the house at $300k, sell at $500k and have a transaction cost of $30k, isn't my profit $170k once applied to the new house tax-free?
2. Is there a way to pay $30k transaction cost separately and use it for some deduction while rolling-over $200k toward the new house so it becomes tax-free? I guess the answer is no but thought of asking.
I really did not buy this house for "transactions" so did not research this.
Thanks again for your inputs guys!
As promised earlier, I will keep you guys posted.
If you’ve lived there for 2 years, you get a capital gains exemption of $500k which you are well under.

That said, forget about your neighbor and ask yourself do you want to sell your home and move? If you want to sell, find your own realtor and put the place on the market and let your neighbor bid on it along with everyone else. No realtor is ever going to overpay for a home and they may be intending to flip it.

I wouldn’t go with Zillow to determine the value. Get your own realtor who can tell you what the property is worth. Taking her offer because it’s 0 commission is penny wise, pound foolish.
This. In fact ask three realtors and average it. Better yet, pay for an appraisal.
And I would add that you could write a deal with your realtor that cuts the buyers realtors commission if that person buys it.
mchampse
Posts: 302
Joined: Mon Feb 26, 2007 12:45 am

Re: New neighbor interested in buying our home too

Post by mchampse »

JediMisty wrote: Sat Jul 03, 2021 5:11 pm
mchampse wrote: Sat Jul 03, 2021 6:39 am
hameshatumkochaha wrote: Sun Jan 24, 2021 10:29 pm Minor update:
I ran into the realtor (neighbor's mother), who offered $500k and no transaction cost (which at 6% is about $30k). Zillow is at $493k currently; so I said, take your time and make an offer that will make us move. Without saying it, I inferred that $500k is not much different than the current market price. If she is indeed interested, she will make a serious offer. If so, I am good to move.
2 quick questions:
1. Curious, if I bought the house at $300k, sell at $500k and have a transaction cost of $30k, isn't my profit $170k once applied to the new house tax-free?
2. Is there a way to pay $30k transaction cost separately and use it for some deduction while rolling-over $200k toward the new house so it becomes tax-free? I guess the answer is no but thought of asking.
I really did not buy this house for "transactions" so did not research this.
Thanks again for your inputs guys!
As promised earlier, I will keep you guys posted.
If you’ve lived there for 2 years, you get a capital gains exemption of $500k which you are well under.

That said, forget about your neighbor and ask yourself do you want to sell your home and move? If you want to sell, find your own realtor and put the place on the market and let your neighbor bid on it along with everyone else. No realtor is ever going to overpay for a home and they may be intending to flip it.

I wouldn’t go with Zillow to determine the value. Get your own realtor who can tell you what the property is worth. Taking her offer because it’s 0 commission is penny wise, pound foolish.
This. In fact ask three realtors and average it. Better yet, pay for an appraisal.
And I would add that you could write a deal with your realtor that cuts the buyers realtors commission if that person buys it.
The market value of your home is ultimately how much someone will pay for it and no one knows that for certain until you put it on the market. A realtor should be able to give you a ballpark of how much someone might be willing to pay for your home.

Appraisal’s are good for legal and tax situations but I wouldn’t use them as a definitive guide for what your home is worth. Appraisers take into account objective criteria like size, location, # of bedrooms/bathrooms, etc. They can’t consider more subjective criteria like the amount of light, layout, staging, etc.

Plus appraisers have a large latitude of what value they can justify. An appraiser can appraise higher or lower depending on what you tell them you’d prefer. There was a case of a black homeowner who had their home appraise $500k higher when they had some white friends pretend they were the homeowners.
neverpanic
Posts: 1023
Joined: Sun May 10, 2020 12:26 am

Re: New neighbor interested in buying our home too

Post by neverpanic »

Watty wrote: Sat Dec 12, 2020 9:14 am 3) If you get seriously talking about this and it does not work out there will likely be hard feelings with your neighbor and having good relations with your neighbor is important even if you are not close friends with them.
The neighbor's problem is not the OP's problem. "Sell me your house because I want it" isn't exactly the most neighborly way to introduce oneself.

In OP's shoes, I'd need the sale price to be the cost to get me into the place I want, plus a very large buffer for moving costs and the inconvenience of having to pack. A 3000sf home isn't small. It's going to take me weeks to pack and my time isn't free. The only way I'm moving before I want to is someone making an "I can't believe someone would pay that much for this house" offer.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
michaeljc70
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Joined: Thu Oct 15, 2015 3:53 pm

Re: New neighbor interested in buying our home too

Post by michaeljc70 »

It's been 20 months. The neighbor is not buying their house.
eldinerocheapo
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Location: Fla Gulf Coast

Re: New neighbor interested in buying our home too

Post by eldinerocheapo »

Our house has nearly tripled in value over 20 years. If someone told me they'd make an offer I couldn't refuse, I'd insist they pay well above market value and purchase the property "as is", with no repairs stipulated in the contract. That would really indicate just how serious they are. We have bidding wars going on daily where the asking price is just a starting point, and homes are selling for tens of thousands more after 20+ bids are submitted.

You're in the driver's seat, enjoy the ride.
"Dream, Dare, Do."
SQRT
Posts: 1792
Joined: Sat Feb 05, 2011 8:44 am

Re: New neighbor interested in buying our home too

Post by SQRT »

michaeljc70 wrote: Wed Aug 04, 2021 8:15 pm It's been 20 months. The neighbor is not buying their house.
I think it’s 8 months?
michaeljc70
Posts: 10843
Joined: Thu Oct 15, 2015 3:53 pm

Re: New neighbor interested in buying our home too

Post by michaeljc70 »

SQRT wrote: Thu Aug 05, 2021 8:17 am
michaeljc70 wrote: Wed Aug 04, 2021 8:15 pm It's been 20 months. The neighbor is not buying their house.
I think it’s 8 months?
Yes. Bad counting. I still don't think they're buying the house though.....
SQRT
Posts: 1792
Joined: Sat Feb 05, 2011 8:44 am

Re: New neighbor interested in buying our home too

Post by SQRT »

michaeljc70 wrote: Thu Aug 05, 2021 8:28 am
SQRT wrote: Thu Aug 05, 2021 8:17 am
michaeljc70 wrote: Wed Aug 04, 2021 8:15 pm It's been 20 months. The neighbor is not buying their house.
I think it’s 8 months?
Yes. Bad counting. I still don't think they're buying the house though.....
Agree. “An offer you can’t refuse”. Boy I’ve heard that one a lot.
michaeljc70
Posts: 10843
Joined: Thu Oct 15, 2015 3:53 pm

Re: New neighbor interested in buying our home too

Post by michaeljc70 »

SQRT wrote: Thu Aug 05, 2021 8:38 am
michaeljc70 wrote: Thu Aug 05, 2021 8:28 am
SQRT wrote: Thu Aug 05, 2021 8:17 am
michaeljc70 wrote: Wed Aug 04, 2021 8:15 pm It's been 20 months. The neighbor is not buying their house.
I think it’s 8 months?
Yes. Bad counting. I still don't think they're buying the house though.....
Agree. “An offer you can’t refuse”. Boy I’ve heard that one a lot.
Exactly. Whenever I hear someone tell me someone is "interested" in their xyz I think call me when when you have the money in your hand. Most people just don't run around overpaying for things that weren't for sale. Especially a professional in the field of what she is buying.
Topic Author
hameshatumkochaha
Posts: 187
Joined: Tue Feb 22, 2011 6:33 pm

Re: New neighbor interested in buying our home too

Post by hameshatumkochaha »

Thanks RM! This is great. What document(s) / articles should I refer to read more about this? This is a very interesting news (even if I am not much into real-estate)!
Valuethinker
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Re: New neighbor interested in buying our home too

Post by Valuethinker »

hameshatumkochaha wrote: Sat Dec 12, 2020 1:52 am Hi,
Interesting situation...
we got new neighbor whose mother is a real estate broker and wants to be very close to the neighbor’s family so has shown interest in buying our home if we were selling.
Once her daughter said, if we had shown interest in selling then she could have made an offer we could not have refused... our zillow is $470k currently.
I don’t want to sell and move but my wife is a little more open to move out of the current 3k sq ft house (built new in 2013).
I thought if I really get an offer I cannot refuse then I could kill two birds in one stone (some of my appreciated capital will roll tax free and my wife might get a house she will like).
Questions:
1. Would you pursue this and if yes, how? by contacting buyer to give a single best offer?
2. What offer would you expect if you were me?
3. I feel that I am overthinking this and should not expect a much sweet offer as eventually it is a business transaction and the buyer is a pro in the field... what do you think?
4. My other mind says, ask the buyer to make an offer anyway; what is the harm?
What would you do?
Thanks
Never, ever, believe what a real estate broker says without considering their interest. My in laws sold to "a family that really wants to live here" - made friends with my MIL w their grandmother** etc. They had sold it on within 2 years. They were property speculators, in essence.

If they want your home, it may be because they want to do a teardown and build a super home? They may know a developer?

US home market is super hot right now, I believe. Shortage of new supply as demand picks up post Covid. Historic prices are therefore a poor guide to current market value.

Beware you could sell, and find that the money gives you nothing to buy.

** my late MIL made a blanket for the grandmother, who spoke no English.
Northern Flicker
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Joined: Fri Apr 10, 2015 12:29 am

Re: New neighbor interested in buying our home too

Post by Northern Flicker »

If it is a hot market where you are, do you have a plan for where you will live if the house is sold?
Topic Author
hameshatumkochaha
Posts: 187
Joined: Tue Feb 22, 2011 6:33 pm

Re: New neighbor interested in buying our home too

Post by hameshatumkochaha »

Yes, the neighbor is not buying the house.
I think what is happening is, I modify the thread with a question / an update and it goes to the top and get more responses.
Yes, for now, this topic is not ongoing. I was just asking what can i read to understand RM's comment about no-tax on $500k profits...

Thanks again to all for the inputs...

michaeljc70 wrote: Thu Aug 05, 2021 8:28 am
SQRT wrote: Thu Aug 05, 2021 8:17 am
michaeljc70 wrote: Wed Aug 04, 2021 8:15 pm It's been 20 months. The neighbor is not buying their house.
I think it’s 8 months?
Yes. Bad counting. I still don't think they're buying the house though.....
adestefan
Posts: 581
Joined: Fri Jan 06, 2017 7:22 pm

Re: New neighbor interested in buying our home too

Post by adestefan »

IRS Publication 523: Selling Your Home

https://www.irs.gov/publications/p523
ponyboy
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Joined: Fri Feb 06, 2015 9:39 am

Re: New neighbor interested in buying our home too

Post by ponyboy »

This thread is over.
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