Seattle Area Real Estate • June 5, 2024

Why Buyer Representation Matters So Much to Sellers

by Windermere MI

Why Does Buyer Representation Matter to Sellers?

In today’s rapidly changing real estate landscape, understanding the critical role of buyer representation has never been more essential for home sellers. With the pending NAR settlement on the horizon, many sellers may not fully grasp the significant impact these changes will have on their transactions. The urgency to adapt is real, and overlooking the necessity of paying a buyer agent compensation could expose sellers to unforeseen risks.

Currently, home buyers are not allowed to roll their buyer agent compensation into their loan. This means they must bring cash to the table to pay their agent (if the seller is not offering buyer agent compensation).

Unrepresented buyers should be considered more than a minor hiccup—it can lead to a cascade of complications that jeopardize the entire deal. To safeguard your investment and ensure a smooth transaction, it’s crucial to recognize the invaluable support a buyer’s agent provides.

What value does a seller receive if the buyer has professional representation? Let us list the ways:

Lender Connections: Buyer agents connect their buyers with well-vetted (and typically local) lender partners who have proven time and again that they can close a transaction, and on time.

Documentation Management: Buyer agents ensure that buyers have delivered all necessary documentation to the lender to ensure full underwriting.

Market Analysis: Buyer agents provide comparable market analysis reports (CMAs) to help buyers understand the market value of the home and support a reasonable offer price.

Contract Guidance: Buyer agents guide their clients through the purchase and sale agreement, ensuring that they understand the terms and conditions and their ability to fulfill their commitments.

Contingency Explanation: Buyer agents explain all contingencies to buyers, ensuring they understand the risks and rewards, especially when waiving contingencies.

Earnest Money Handling: Buyer agents ensure that earnest money funds are delivered to escrow on time.

Transaction Deadlines: Buyer agents ensure that their client and their lender observe and adhere to all deadlines to keep the transaction flowing smoothly and closing on time.

Inspection Access: Buyer agents provide access to home inspectors and help their buyers understand the reports. This is critical as most MLS associations require an agent to be present whenever a door is opened. If the buyer doesn’t have representation, the listing agent must give access, exposing them to inspection findings and forcing them to disclose on behalf of the seller.

Appraisal Assistance: Buyer agents give access to appraisers and typically provide reports of comparable properties to support the purchase price, ensuring the property appraises at value.

Negotiation Support: If the appraisal report comes in less than the purchase price, the buyer agent will help negotiate and collaborate with the listing agent to ensure a mutual agreement is reached by all parties.

Transaction Coordination: Most importantly, the buyer agent helps keep their client and all parties on track to ensure closing, and crucially, on time.

The value a buyer agent brings to the transaction is indispensable. Their expertise not only facilitates a smoother process but also protects all parties involved from potential pitfalls. By ensuring the buyer has professional representation, sellers can avoid significant risks and secure a successful transaction. In the evolving real estate market, investing in buyer agent compensation is a wise decision that benefits everyone involved.

We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative, and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.

This article originally appeared on the Windermere blog on 5/29/24 & Inman News on 5/21/24.

Tax Benefits Every Homeowner Should Know About

by Windermere MI

It’s tax season again, but being a homeowner might just make it rain at refund time. Check out the tax-deductible expenses, exemptions, and credits below. Whether you own a house, condo, or mobile home, they can save you big money when you file. Just be sure to compare your total itemized deductions against the standard deduction and see which is higher (you’ll have to choose between standard OR itemized on your return). It’s also good to know what you can’t deduct before you land in hot water with the IRS…

Mortgage Interest

A house payment is comprised of two parts: principal and interest. The principal goes toward reducing the amount you owe on your loan and is not deductible. However, the interest you pay is deductible as an itemized expense on your tax return. You can generally deduct interest on the first $750,000 of your mortgage (or $375,000 each if you’re married filing separately) if you purchased your home after December 15th 2017. Those who purchased earlier (10/14/1987 – 12/15/2017) can deduct interest paid on up to a $1m mortgage.

Property Taxes

You can deduct up to $10,000 of property taxes you paid (or $5,000 if you’re married filing separately). If you have a mortgage, the amount you paid in taxes will be included on the same annual lender statement that shows your loan interest information. If you paid the property taxes yourself but don’t have receipts, you should be able to locate the total tax amount on your county assessor’s website.

Home Improvements

Making improvements on a home can help you reduce your taxes in a few possible ways:

If using a home equity loan or other loan secured by a home to finance home improvements, these loans will qualify for the same mortgage interest deductions as the main mortgage. Only the interest associated with the first $100,000 is deductible (and if you’ve already maxed out the interest deduction on your main mortgage, you won’t be eligible for any additional deduction for this loan).

Tracking home improvements can help when the time comes to sell. If a home sells for more than it was purchased for, that extra money is considered taxable income. However, you are allowed to add capital improvements to the cost/tax basis of your home thereby reducing the amount of taxable income from the sale. Keep in mind that most taxpayers are exempted from paying taxes on the first $250,000 (for single filers) and $500,000 (for joint filers) of gains.

Home improvements made to accommodate a person with a disability (yourself, your spouse, or your dependents who live with you) may be deductible as medical expenses. Examples include adding ramps, widening doorways/hallways, installing handrails or grab bars, lowering kitchen cabinets, or other modifications to provide wheelchair access.

If you live in Washington State and apply with your county prior to construction, you may be able to get a 3-year property tax exemption for major home improvements (including an ADU or DADU) that add up to 30% of the original home’s value.

Home Office Deduction

If you run a business out of your home, you can take a deduction for the room or space used exclusively for work as your principal place of business. This includes working from a garage, as well as a typical office space. Unlike most of the other deductible expenses, you can deduct home office expenses even if you opt to take the standard deduction.

This deduction can include expenses like mortgage interest, insurance, utilities, and repairs, and is calculated based on “the percentage of your home devoted to business use,” according to the IRS.

Home Energy Tax Credits

For homeowners looking to make their primary home a little greener, either the Energy Efficient Home Improvement Credit or the Residential Energy Clean Property Credit can help offset the cost of energy efficiency improvements. Even better, these are credits, which means they directly lower your tax bill.

Energy Efficient Home Improvement Credit: 30% of the cost for qualified high-efficiency doors, window, insulation, air conditioners, water heaters, furnaces, heat pumps, etc. Maximum credit of $1,200 (heat pumps, biomass stoves and boilers have separate max of $2,000).

Residential Clean Energy Credit: 30% of the cost for adding qualified solar/wind/geothermal power generation, solar water heaters, fuel cells, and battery storage.

What You Can’t Deduct:

Mortgage Insurance (this is a change as of 2022)
Title Insurance
Closing Costs
Loan Origination Points
Down Payment
Lost Earnest Money
Homeowner’s Dues*
Homeowner’s/Fire Insurance*
Utilities*
Depreciation*
Domestic staff or services*

*Unless it’s related to your home-office deduction—contact your tax pro to see if it’s a qualified deduction for you.

Do you have a low-income, disabled or senior homeowner in your life? Check out this article on King County property tax relief.

Psst…every homeowner’s financial situation is different, so please consult with a tax professional regarding your individual tax liability.