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3 Buyer Mistakes that Make Dream Homes Disappear

by David DiGioia


If you’ve been in the business for even a short time, you’ve probably suffered alongside a buyer client through the process of being “educated by the market,” so to speak. See, some buyers brief themselves on the market by reading up online, looking at the comps and factoring their agent’s advice into their plan of action. But many others simply refuse to take “seller’s market” for an answer, only taking their home buyer education from the market itself. This usually means they have to lose out on several (or several dozen) homes before they conform their house hunting and offer strategy to reality.

It’s unfortunate, but it happens. And in a market like today’s, it happens a lot. Here are a few of the most common ways buyers make their own dream homes disappear.


1. Wanna-be wheeling and dealing.

Some people love a bargain. I mean, they love the idea of getting more than they’re paying for almost more than the gratification of the purchase itself! And the internet era has encouraged this. There’s a whole consumer segment of folks, myself included, who never make a purchase online without first running a Google search to find a promo or coupon code, or to check to see if the item is available elsewhere for less.

The problem is that this mentality simply does not apply to a real-time auction atmosphere marketplace like real estate. In other words, real estate is not retail. Homes are not commodities as interchangeable as shirts or shoes, and there’s no such thing as a guaranteed “Buy It Now” price.

In fact, the list price is often more like the starting price in a multiple offer situation, like those that are so common right now. Plus, home sale transactions are much more complex, and involve many interrelated terms that impact the price to which a seller might agree; cash offers can often close faster and at a discount compared to lender- or seller-financed offers.

Wanna-be wheelers and dealers are those buyers who try to apply their promo code mentality to their home buying endeavor, aiming for a standard 5%, 10% or even 15% discount rule of thumb in their offer prices. They crave a deal, no matter whether the other circumstances of the transaction render a discounted price sensible. These people don’t care if the list price was already below market, or if there are a dozen other offers, they want their discount. Well, at least the do the first few times they make an offer.

Over time, especially in markets where prices are ascending, savvy agents can show these buyers how their insistence on getting a discount is actually costing them money as home values rise and the number of buyers active in the market heats up. In cases of first-time home buyers stuck in wanna-be wheeler dealer mode, showing them the tax advantages they are foregoing while they spend months trying to save a few thousand bucks can also be instructive. Finally, the pain of losing one too many “just-right” homes turns out to be the experience that educates many of these buyers that this is one transaction in which an across-the-board discount code just doesn’t exist.

2. Holding onto conflicting wish list items.

I once had a couple of clients – lovely human beings – who simply could not move from conflict to compromise in terms of their “must-have” list of home features. In particular, one of them wanted a home with panoramic views of the Bay (doable, on their budget) and the other wanted a home within very short walking distance from one of several local shopping districts (also doable on their budget). The problem was that there are very few homes that even exist that are geographically elevated enough to get great Bay Views while still being less than a mile from these strolly, village-ey shopping centers; the few such homes that did exist were the toast of the town and so outside their budget.

This happens all the time. One buyer wants vintage charm, while the other insists on a contemporary aesthetic. Or one wants a rambling, kid-and-dog-friendly lawn while the other insists on a low-maintenance hardscape. But most people are able to work it out and hug it out, or come across one home they both love so much that the compromise is made, de facto, by what features and amenities the property has (or lacks).

3. Finger-pointing.

“My mortgage broker is an idiot.” “My agent doesn’t listen to me.” “The Fed is crooked. “My Mom was bad with money.” “Sellers are so greedy!” “It all goes back to Reagan/Clinton/Bush/Obama, if you ask me.”

Home buying is not simple. Nor is it easy, or cheap, in most areas. And, as we in the industry are wont to say, it’s most people’s largest purchase, largest asset and largest investment. Ever. So, many buyers do not come to the table being comfortable having the conversations, making the decisions, or engaging in the negotiations smart home buying requires. Add in the changes in the market and the inevitable emotional roller coaster of loving a home enough to make an offer on it and then not getting it, and you have a recipe for frustration. Anger, even.

It’s not uncommon for frustrated buyers to engage in finger-pointing, citing everyone from their mother to the last 30 years of presidential administrations for their stuck house hunt or inability to afford the home of their dreams. It’s okay to vent, but in order to finally secure a home that works for their lifestyles, their families and their budgets, these folks have to turn the finger around, pointing it squarely at themselves.

And agent coaching can help. This is not about trying to argue with the buyer about how wrong they are in placing blame – that’s a battle you’ll never win. And it’s not about buying into it or playing the blame game with them, because assigning blame is counterproductive (unless you happen to have a direct line to the White House). Rather, it’s about taking two positions on a consistent basis: problem-solving and empowerment.

When you hear your client start to spiral into blame, acknowledge her upset, then shift the conversation into problem spotting and solving mode. Work with them to identify where the house hunt is misguided (e.g., hunting in too high a price range) or offer strategy is not working (e.g., consistently coming in at the bottom of a long list of offers). Then, constantly surface wise suggestions for things your client can proactively do to change her own house hunting fortunes.

Here’s a script: “I know you disagree with some of the national policies on housing, but that’s really beyond our control. And I know lots of buyers in your position who are managing to be successful in this market. I want to give you some strategic recommendations for taking control of your house hunt so you can buy before prices go up any more – here are some things I think you can do.”

Those are the top 3 buyer mistakes I’ve noticed recently. What else have you seen with your buyer clients?

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9 Easy Mistakes Homeowners Make on Their Taxes

by David DiGioia

Don’t rouse the IRS or pay more taxes than necessary — know the score on each home tax deduction and credit.



As you calculate your tax returns, consider each home tax deduction and credit you are — and are not — entitled to. Running afoul of any of these 9 home-related tax mistakes — which tax pros say are especially common — can cost you money or draw the IRS to your doorstep.

Tax papers on the floor


Sin #1: Deducting the wrong year for property taxes


You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind — that is, you’re not billed for 2013 property taxes until 2014. But that’s irrelevant to the feds. 

Enter on your federal forms whatever amount you actually paid in 2013, no matter what the date is on your tax bill. Dave Hampton, CPA, tax manager at the Cincinnati accounting firm of Burke & Schindler, has seen home owners confuse payments for different years and claim the incorrect amount.



Sin #2: Confusing escrow amount for actual taxes paid


If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed, says Bob Meighan, CPA and vice president at TurboTax in San Diego. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.

For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200. Your lender will send you an official statement listing the actual taxes paid. Use that. Don’t just add up 12 months of escrow property tax payments.



Sin #3: Deducting points paid to refinance


Deduct points you paid your lender to secure your mortgage in full for the year you bought your home. However, when you refinance, says Meighan, you must deduct points over the life of your new loan. If you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $133 per year.



Sin #4: Misjudging the home office tax deduction


The deduction is complicated, often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return. But there’s good news – there’s a new simplified home office deduction option if you don’t want to claim actual costs. If you’re eligible, you can instead claim $5 per sq. ft. up to 300 feet, or $1,500.



Sin #5: Failing to repay the first-time home buyer tax credit


If you used the original home buyer tax credit in 2008, you must repay 1/15th of the credit over 15 years. If you used the tax credit in 2009 or 2010 and then sold your house or stopped using it as your primary residence, within 36 months of the purchase date, you also have to pay back the credit.

The IRS has a tool you can use to help figure out what you owe.



Sin #6: Failing to track home-related expenses


If the IRS comes a-knockin’, don’t be scrambling to compile your records. Many people forget to track home office and home improvement expenses, says Meighan. File away documents as you go. For example, save each manufacturer’s certification statement for energy tax credits and lender or government statements to confirm property taxes paid.



Sin #7: Forgetting to keep track of capital gains


If you sold your main home last year, don’t forget to pay capital gains taxes on any profit. You can exclude $250,000 (or $500,000 if you’re a married couple) of any profits from taxes. So if your cost basis for your home is $100,000 (what you paid for it plus any improvements) and you sold it for $400,000, your capital gains are $300,000. If you’re single, you owe taxes on $50,000 of gains. However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523.



Sin #8: Filing incorrectly for energy tax credits


If you made any eligible improvements in 2013, such as installing energy-efficient windows and doors, you may be able to take a 10% tax credit (up to $500; with some systems your cap is even lower than $500). But keep in mind, it’s a lifetime credit. If you claimed the credit in any recent years, you’re done. Fill out Form 5695.

The first part of the form, which covers systems eligible for a larger tax credit through 2016, such as geothermal heat pumps, can be complex and involves crosschecking with half a dozen other IRS forms. Read the instructions carefully.



Sin #9: Claiming too much for the mortgage interest tax deduction


Taxpayers are allowed to deduct mortgage interest on home acquisition debt up to $1 million, plus they can also deduct up to $100,000 in home equity debt.

This article was original published in January 2011.




This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

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8 Best Large Metros for Home Ownership!

by David DiGioia

Financial site NerdWallet recently analyzed the top 100 most populated metro areas to determine which areas are the most favorable to home buyers. They factored in the number of homes available, the median household income and monthly home owner costs, and population growth to find out what areas have strong economies. 

The eight large metros that emerged at the top of their list were:

1. Raleigh-Cary, N.C.
Median selected monthly home owner costs: $1,482
Home owner costs as percentage of household income: 29.5%

2. Charlotte-Gastonia-Rock Hill, N.C.-S.C.
Median selected monthly home owner costs: $1,394
Home owner costs as percentage of household income: 32%

3. Salt Lake City
Median selected monthly home owner costs: $1,527
Home owner costs as percentage of household income: 30.7%

4. Indianapolis-Carmel
Median selected monthly home owner costs: $1,248
Home owner costs as percentage of household income: 29% 

5. Nashville-Davidson-Murfreesboro-Franklin, Tenn.
Median selected monthly home owner costs: $1,367
Home owner costs as percentage of household income: 32.1%

6. San Antonio-New Braunfels, Texas
Median selected monthly home owner costs: $1,337
Home owner costs as percentage of household income: 31.4%

7. Jacksonville, Fla. 
Median selected monthly home owner costs: $1,472
Home owner costs as percentage of household income: 34.7% 

8. Louisville/Jefferson County, Ky.-Ind.
Median selected monthly home owner costs: $1,206
Home owner costs as percentage of household income: 30.2%


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Contact Information

Photo of David DiGioia Real Estate
David DiGioia
Realty Executives Unlimited
17718 Kings Point Dr, Suite B
Cornelius NC 28031
Fax: (866)476-8652