Manon's Home Fit Magazine

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Letter from the Editors Whether you are a buyer or a seller, there’s nothing that can take the place of understanding how the whole real estate game works. In this issue, we’re excite to provide you with a clear game plan of important issues that affect all the players in this exciting game. In the first article, you’ll gain a better understanding concerning all the fuss surrounding appraisals. Next, we’ve provided an article to show why your credit rating matters and how you can boost your credit score. If you’re the blessed owner of a green thumb, you’ll enjoy the segment on growing your own herb garden. You’ll find great ideas about how to lay out your garden and keep it healthy and growing. Next, you may have tossed around some ideas about ways you can improve your home’s resale value. Before you put out too much cash, make sure to read the article about common home improvement projects that rarely provide much payback. It could save you big. If you work from home, you might have discovered that it isn’t as easy as you envisioned. If this is true for you, you’ll appreciate the insight offered in the article about maximizing your effectiveness by transforming your workspace. Finally, Dan Landers offers a helpful hint about accepting gifts from well-meaning family members without getting them into trouble at tax time. We hope you enjoy this issue; let us know if you have any ideas you would like us to discuss in the future!2

CONTENTS4. What’s the Big Deal AboutAppraisals?6. Why Your Credit RatingMatters8. How to Create the PerfectHerb Garden10. 5 Home ImprovementProjects That Should AddValue, But Don’t12. Working From Home?Create Your Space forMaximum Productivity14. When a Gift Results in TaxTroubleThis magazine is published monthly. Entire contents are copyright protected under law where applicable. All RightsReserved. Reproduction or use of content in any manner without permission is strictly prohibited. All images arecopyright protection of 123RF.com and its photographers. 3

What’s the Big Deal About Appraisals?Even if you are a professional A home appraisal will help you Generally, however, you aresalesperson, trying to sell your to efficiently and professionally going to have a full appraisal,own home can be quite the determine the current worth of which involves an agent comingchallenge. From the beginning your property. While it may not to the house and going throughto the end of the process, paying choose to list it at exactly that the entire property to determineattention to the details is of price for a number of reasons, its worth.utmost importance. you will use it as a guide. Which Method to SelectUnderstanding the components Types of Appraisals Availableof a home appraisal, as well as Depending upon the exactwhat it means for you, is crucial Different appraising entities are scenario you are in, you might bebefore you leap into the selling going to have various methods limited to certain options. In theadventure. for conducting one. Some will event that you have the choice of simply collect values of similar which avenue you’d like to walk,Why It Matters properties in the area and make selecting the full appraisal is the a judgment based on these best idea.When you put your house up amounts.for sale on the market, you need Even though comparisonsto determine the price at which Other entities are going to drive- can be useful, they do not sayyou’re going to list it. Randomly by the house and assess it from anything about the condition ofselecting a cost, or estimating the outside. Later, you’ll learn your house. Also, simply havinghow much it is worth, is just why curb appeal is so important, someone drive past the propertygoing to leave you in the dark at and it is particularly critical to this does not guarantee that theleast a bit. type of appraisal. person is going to be able to4

obtain the full appeal of your clean every inch of the interior Meeting the Appraisal Pricehome. and work to make a lot of changes inside of the house. Some people go through a lotHaving a thorough appraisal of trouble to get their houseoffers you the best opportunity However, you also need to pay into the best condition possibleto get the most accurate reading a great deal of attention to the because they are adamant abouton your house. curb appeal of your property selling their house for more than because this element has a the appraisal price.When to Schedule It significant amount of weight when it comes to how much the However, you must thinkYou don’t want to have an house is worth. Take the time to realistically. You probably wouldappraisal too far in advance of clean up the outside of the house not want to pay more for an itemthe time you list the house on the and to make sure that it is safe. than it is worth, so you shouldmarket. Otherwise, you are going For example, you want to ensure not expect that other peopleto have a difficult time making that cracks in the driveway are would want to do that.sure that the appraisal includes filled in.any modifications or up-to-date Therefore, when you are settingfeatures. The Interior of Your Home the price, you need to be realistic about what you can get. TheAlso, the market can ebb and The curb appeal is an important buyers are likely going to wantflow, so an appraisal that you element that carries a great deal to know the appraisal price, sohad a year ago could be different of significance in the appraisal you should expect that the offersnow. value of your house, but you also are going to be closer to that want to consider any updates ballpark than well over it.If the selling process takes that the inside needs.awhile, you might want to have The home appraisal is a processanother appraisal done to ensure For example, if some of the that you should not ignore. Whenthat the first one you had was still cabinet doors are falling apart or you want to make an acceptableaccurate. the tiles on the bathroom floor amount of money on your are starting to come up, you property, you need to really takeYour Appraisal and Curb need to take care of these issues this element into consideration.Appeal before the appraisal actually happens. Failure to do so couldWhen people know that an mean that your house is notappraisal professional is coming appraised for as much as it couldto the house, they might start to have been otherwise. 5

Why Your Credit Rating MattersBefore a lending institution will What is a Credit Report? What’s the Difference?give you a mortgage to purchasea new home, it wants to estimate Your credit report is a summary It is important to differentiatehow much risk you present as a of the credit you have been between a credit report and aborrower. If the bank perceives extended in the past and how credit score, both of which areyou as having a high default risk, you have handled it. used by most lenders to makeit will protect itself by charging credit decisions.you a higher interest rate for a Are most or all of your paymentsloan or if the perceived risk is made on time? Have you had a Your credit report features thehigh enough, by denying you repossession or foreclosure due summary of information on youraltogether. to nonpayment? Any accounts in credit history as described above. collections? How close are yourSo how do banks determine how balances to your credit limits? There are three major bureausrisky of a proposition it is to loan that issue credit reports:you money? The most valuable This is the kind of informationtool they have is your credit that is visible to prospective • Experianreport. lenders in your credit report. • Equifax • Transunion The information from the three bureaus is very similar; however, there are occasionally slight discrepancies, as some creditors do not report to all three bureaus. In addition to providing credit reports, each bureau has a formula for taking the information within the report and using it to generate a numerical credit score, also known as your FICO score. FICO scores range from 350 to 850. Most lenders consider borrowers with 720 FICOs and above to be “A” borrowers. Borrowers with FICOs between 620 and 720 can generally still get a mortgage but with less favorable rates and terms.6

With a FICO below 620, it can be • 30 percent is your debt to How to Improve Your Scoredifficult to get a mortgage at all; credit limit ratio. The closerhowever, there are some niche your debt is to your total credit If a bad credit report or low FICOprograms such as FHA loans available, the higher default risk is holding you back from gettingwhich offer mortgages to people you are perceived to be. a mortgage, there are steps youwith very low FICO scores in can take to clean up your reportcertain circumstances. • 15 percent is based on your and improve your score. length of credit history. TheHow are Credit Scores longer your credit history, The first step is to fix erroneousCalculated? the more of a track record is information on your credit report established for lenders to make by disputing it directly with theTo better understand your FICO an educated judgment on your credit bureaus. This can be donescore and the steps you can take creditworthiness. online through their respectiveto improve it, it is important to web sites.know how it is calculated. • 10 percent involves the types of credit used. Lenders like to When you file a dispute, theEach bureau uses a slightly see a diversity in type of credit creditor who reported thedifferent formula, but for used, but too much revolving information must respondthe most part, here are the (credit card) debt is a red flag. within 30 days; otherwise,components of your credit report A track record of taking out the information in question isthat affect your score and what mortgages and paying them on automatically deleted.percentage of your score they time will help you here.account for: Next, you should try to pay down • 10 percent is based on new any credit card balances that are • 35 percent is your payment credit. Applying for new credit close to your credit limit. This will history. How many of your cards or car loans immediately lower the ratio of your debt to monthly payments have been before trying to get a mortgage available credit and make you a 30, 60, or 90 days late? sends up a red flag and more attractive borrower. therefore is not advised. Also, don’t apply for any new credit. Not only will this lower your score by decreasing your average length of open accounts, but new hard inquiries make it look like you’re “credit shopping,” a no-no when trying to get a mortgage. Finally, see to it that you make all your payments by their due dates each month. This means paying at least the minimum payment on your credit cards. On-time payments establish you as a responsible borrower who pays his bills. 7

How to Create the Perfect Herb Garden Herbs are some of the most Starting in the fall, you should interesting plants around. From prepare the area for spring adding flavor and zest to dishes planting by tilling it up and to treating common maladies, working fertilizer and/or herbs have a wide variety of uses compost into the soil. Then, in in the kitchen and around the early spring, dig up a shallow home. trench with a hoe or similar device and put in more fertilizer Because of this, herbs are a alongside your rows. popular addition to gardens in every environment and locale in This is known as “sidedressing” the world inhabited by humans. and allows additional fertilizer to reach the plants through Growing your own herbs can the action of rain and artificial be a productive and enjoyable irrigation. pastime, allowing you to get closer to nature and help offset Laying Out Your Garden your grocery budget. The layout depends in large part In this article, we will discuss on how much space you have how to prepare your soil, how to available. choose the right herbs for your environment, and how to lay out A flowerbed in the front yard your garden for optimal results. will obviously take up a lot less room than a full-size garden, Preparing Your Soil and growing directly in the soil requires less space than growing Every region has different soil, in pots in the soil. from fertile silt to moisture- gulping clay. However, herbs in The key factors that dictate how the wild are practically weeds. to organize your garden include: They will grow virtually anywhere with minimal coaxing. • Projected heights of plants, with tallest toward the middle For optimum yield and the or “back” of the garden best possible flavor and scent, you should prepare your soil • Light and shade requirements beforehand. If you have a of each plant compost heap, this will be much easier, but basic fertilizer from • What herbs grow best in your any garden supply store will work area just fine. • Type of plant i.e. creeper, climber, or tall8

To determine what kinds of Which herbs you plant will to a Final Thoughtsherbs will grow best in your area, greater or lesser extent dependcontact your local horticultural on the layout of the garden, how Growing an herb garden insociety or ask the people at your much space you have available, your home can be an enjoyablelocal garden center. and the light and shade needs of summer hobby for the entire each plant. family, with benefits that last farThese can also be valuable beyond the growing season.sources of information about Because of this, you may findlight and shade needs and the some herbs work better in your Herbs with high yields couldapproximate heights you can garden than others, while other save your family a lot of moneyexpect various herbs to grow to. herbs may be impractical for a on store-bought, dried spices number of reasons. and herbs that you can grow andYour layout will also be store yourself.determined by the natural lay This will also affect how muchof the land and the direction of of each kind of herb you plant. These herbs will generally bedrainage. Some herbs grow wild with little more flavorful and enjoyable, encouragement or additional because you know exactly what“Thirstier” plants that require assistance, while others may went into and onto them at everymore water should be on the need extra care in environments step of the growing process. Youlow side or toward the direction that are outside their normal can save many of these herbs forof drainage to get the maximum tolerances. use during the winter, and theamount of water, while hardier garden will beautify your homeplants that require less water Too many “wild” herbs will readily as well!should be planted higher or choke out other types of herb,against the direction of drainage. making it important to constantly prune and cull these so theyChoosing The Right Herbs are maintained at a manageable level.The next thing to consider iswhat you want from your garden.Many people plant culinaryherbs such as dill, mint, sageand basil. Others plant medicinalherbs such as aloe vera, mint,chamomile and echinacea.Many herbs serve dual purposes,making them more versatileand useful for a broad range ofapplications. However, a gardenpredicated on mainly medicinalherbs is likely to be laid out andharvested differently than onethat is intended primarily forculinary use. Knowing what herbsyou want and why is a crucialfirst step in creating a garden thatwill give you the most utility andbest results. 9

5 Home Improvement Projects ThatShould Add Value, But Don’tLots of homeowners believe Here are five home improvement Swimming pools require a lot ofthat if they put a lot of time and projects that should add value, upkeep. The water has to be keptmoney renovating the house and but usually don’t. This doesn’t sparkling clean, which meansthe property, it will make it easier mean that you shouldn’t do increased energy costs fromto sell when the time comes. It them. Just don’t expect them pumps and filters. The tile has towill also increase the value of the to make your home irresistible be scrubbed clean of algae andproperty. This is not necessarily when it finally goes on the cracks have to be repaired.true. market: More than anything else, theTo be blunt, many real estate 1. A Swimming Pool pool needs to be made safeexperts claim that the only by surrounding it with a sturdyrenovations that have a good A lot of people would rather visit fence. But for some families withchance of increasing the value of a house that has a swimming very young children, nothingthe house are the kitchen and the pool than have one. can make a swimming poolbathrooms. safe enough. This might cause10

them to pass on a house that’s On top of this, the colors and off and replace them withotherwise just right for them. patterns just might be absolutely simpler stuff that’s more to their wrong for the decor the buyer taste, but it’s a pain in the neck.One thing that may be worth has envisioned for his or her new Potential buyers might go for athe thousands of dollars it home. Rather than tearing the home whose old furnishings theycosts to install a swimming carpeting up and renovating the can live with, at least for a while.pool is if everyone else in the floor beneath it, a buyer will lookneighborhood has one. Some at another place. 5. Upgrades That Are Invisiblehomeowners can’t stand to bethought of as the odd man out. Skip wall-to-wall carpeting and It’s certainly nice that you’ve buy area rugs, runners and mats replaced your old, inefficient2. A Gorgeous Landscape instead because they’re portable. HVAC system with one that’s zoned, computerized, can beThe money and sweat equity 4. Crazy Expensive Upgrades controlled over the internet andthat you’ve put into making your whose warranties can be rolledlandscape the talk of the town You personally went to Italy and over to the new owner.might have limited appeal. picked the slab of carrara marble that you wanted for your kitchen It’s absolutely swell that youIt’s simple. People want their countertops, had all of your repiped your old plumbinglandscape the way they want cabinets carved out of bubinga system with its limescaled andtheir landscape. You may be in wood with satinwood veneers rusted pipes with those versatilelove with hostas and put them and splurged on a couple of PEX lines. But is brand neweverywhere where there’s even Maria Teresa chandeliers. Believe plumbing and HVAC, which thea bit of shade. A potential buyer it or not, this might not increase new owner won’t even see all themight not like them. Rather than the value of your home. time, a selling point? Probablyspending the time and effort to not as much as you’d like it to be.dig all of those plants out, they’ll Also, some potential buyersmove on. may find such pricey upgrades Remember, some home offputting. It’s true that they renovations will add to theNot only that, even if the can take all of your expensive home’s resale value, but mostprospective buyer does think furnishings out, auction them won’t!your landscaping is beautiful, heor she might simply not have thetime or inclination to keep it asbeautiful as you have.3. Wall-to-Wall CarpetingFor some potential buyers, justthe sight of acres of wall-to-wallcarpeting is a deal breaker. Theydon’t even care what else is inthe house that they might covet.Wall-to-wall carpeting needsmore care than hardwood orstone floors. The fibers harbordust mites, dirt, grime andallergens. 11

Working From Home? Create YourSpace for Maximum ProductivityThere are many benefits to 1. Location The nature of the work shouldworking from home, such as also be considered whenthe freedom to set your own It is important to choose a space choosing the location. Forschedule and work at your own where you will be comfortable example, the office should lookpace. The key is to create an spending many hours. You will professional and tidy if there willoffice space that maximizes want to ensure that there is be clients visiting regularly. Aproductivity. sufficient space for all that you separate entrance and bathroom need to do and so that you are may also be good features.An optimal workspace not not cramped and uncomfortable.only benefits you, it can make Distractions are another factoryour home more attractive to Spare bedrooms are among the in choosing a location. Anpotential buyers. A house with an most popular choices for home office space located off theoffice can sell more quickly than office spaces, but many homes kitchen or in other high-trafficone without. provide other options. A formal areas will not be conducive to living room, attic or dining room productivity, especially in a homeHere are three things that should that does not get a lot of use can with children or pets. Likewise, abe kept in mind when creating a also be good for an office. room with windows may be lesshome office space. helpful for those who are easily12

distracted when compared to a from a window. Table lamps a functional workspace willwindowless basement. On the are a good option for providing cost about $29,000 on average.other hand, some individuals may warmer artificial lighting while This amount is flexible and itwant a nice view as they work. opening up many design is entirely possible to create opportunities. a usable office for far less,2. Functionality especially if you are willing to Furniture should be chosen with take on some of the work.When creating a space for work, ergonomics in mind with thefunctionality is obviously very most important element being The ways in which a home officeimportant. The office should the desk chair. It is important can reduce taxes should also bebe able to fit everything that to recognize the fact that this considered when calculating theis needed for your work. It is a chair may be heavily used and cost. The costs associated withgood idea to draw a floor plan therefore should be chosen a home office may be deductedbefore making any purchasing carefully. whether you are self-employeddecisions. Knowing how much or an employee.operational space there is can Aside from a quality chair, ithelp when choosing the type of is important consider work It is possible to find out howequipment to buy. surfaces. Desks, counter tops and much a home office will save you drawing boards will be necessary by measuring the office spaceOffices need good lighting. depending on the type of work to and calculating its percentageEffective lighting can reduce be done in your office. It will also of the home’s overall squareeyestrain and headaches. be important to have surfaces for footage. That percentage mayNatural light from a window other equipment such as printers, be used to determine the office’scan be helpful and a nice view sewing machines or servers. share of home expenses andcan provide you with a break that share may be eligible forfrom your computer monitor 3. Cost a home office deduction. Thisperiodically. When using natural information is general in nature,light, monitors will have to be Remodeling Magazine’s Cost is not complete, and may notpositioned to minimize glare vs. Value Report estimates that apply to your specific situation. You should consult your own tax advisor regarding your tax needs. Aside from the tax benefits, a home office that is devoted exclusively to work is more efficient. Having a dedicated space means that papers and equipment will not have to be moved every time the room is needed for something other than work. Dedicated space also keeps work from interfering with your personal life. 13

From the desk of Dan LandDear Dan Landers,My wife and I are expecting our fifth child, and we are searching for the right home for our growing family.My in-laws, who are thrilled about the prospect of our moving their grandkids closer, have decided to give us$100,000 to put toward the purchase of our new home. They have decided to provide the same amount forall three of their children when the time comes, and since my wife is the oldest, our family is the first to enjoythe blessing of their generosity.As wonderful as this is, I’m afraid we’ve hit a snag. My father-in-law spoke with an attorney friend of hisrecently while at a car show. He mentioned that we were moving closer and that he was planning to help usout quite a bit, and the friend warned him that large gifts are taxable to the donor. My father-in-law is alwayshit hard at tax time, and this news was quite a downer for him. I think he’s wishing he’d known this before hepromised us his help, and as much as we were excited about the open doors his gift would provide, we don’twant it to be a hardship for him.Is there any truth to what the attorney said to my father-in-law? Should we just forget about my in-laws’gracious offer? Would accepting it result in tax troubles for him?Disheartened,Dave When a Gift Results in Tax Trouble Dear Disheartened Dave, Best regards on your new addition! Nothing makes a house feel like a home like a happy crowd of kids. Your father-in-law did well to run into his old friend at that car show. The attorney was right; gifting an amount as large as $100,000 would definitely raise flags with the IRS. Your in-laws would be charged gift taxes on top of the gift they gave you, and depending on how uptight your in-laws were, the whole situation could result in damage to a close relationship. There’s nothing easy about passing along money, especially in our tax-loving system. That’s why so many families have trouble when it comes time to settle an estate. In essence, your in-laws are attempting to pass14

ers on your wife’s inheritance before their death, and the financial powers that be are determined to get a share. That’s why there are gift taxes in place to begin with. That said, take heart: There’s still no reason your family can’t be helped by your in-laws. It will just take a bit of planning. I’ll let you in on something: I went through a similar situation a couple years ago. My son was starting a new business, and I wanted to help him. Although I didn’t have as much to give him as you’re being offered, it was an amount that would have resulted in my being taxed for this income that had already been taxed when I first earned it. My accountant advised me to break up the gifted amount between me and my wife, since the law allowed that gifts from a husband and wife to a certain child would be treated as separate gifts. I followed his advice, and my wife and I each gifted our son a certain amount under that year’s limit of $13,000. Since the gift fell below the exclusion level, we weren’t required to pay any taxes on it. One possible approach you could take would be to check with your accountant to see what is this year’s gift tax exclusion amount. Say it’s $14,000; your father-in-law could write you a check for $12,500 and your wife a check for $12,500. Then your mother-in-law could do the same, writing a check to both of you for $12,500 each. Since the gifts would be from separate people to separate people, they would have effectively transferred $50,000 to your family without owing taxes. Then after the first of the year, they could do the same thing again, and voila! You’d have your $100,000 with no extra taxes for your father- in-law to pay. Again, my advice is based on my own experience, so you’ll definitely want to check with a legal expert before running with it. There’s a proverb that says, “An inheritance may be gotten hastily at the beginning; but the end thereof shall not be blessed.” Above all, make sure your in-laws know how you appreciate them, even if their good intentions are slow in materializing. Best regards, Dan Landers 15

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