Information For Wiconsin Lake Area Buyers
and Sellers
Buying or selling a lake property can be very exciting
however it is very important to know what you are getting into.
I have provided a group or articles, tips and checklists to
help with the process. Think of this section as your
reference library.
If you have any questions or would like to make an
appointment to buy or sell your property, you can reach me by
calling 708-370-7019 or by  email.
Article List
Property Wish
List
Understanding Capital Gains in Real
Estate
10 Things to Take the Trauma Out of
Homebuying
20 Low-Cost Ways to Spruce Up Your
Home
Common Closing Costs for
Buyers
What Sellers Net at Closing
Log Home Basics
Property Wish List
While your opinions on the type of home you want to own may
change during the homebuying process, this easy checklist will
help you prioritize and give us a place to start.
How close do you need to be to: (a) lake_______
(b) your current home _______
(c) airport _______ (d) expressway _______ (e) town_______
(f) other_______?
How large of a lot would you prefer?
Is the sytle of the house important?
How large of a lake do you want?
How old a home would you consider?
How much repair or renovation would you be willing to do?
Do you have to be on the lake or is lake access OK?
Do you any features you just can't do without?
Prioritize each of these options into Must
have Would prefer
Lot (at least_________)
Garage (________)
Patio/Deck
Boat House
Dock
Bedrooms (number_________)
Bathrooms (number_________)
Family room
Formal living room
Formal dining room
Eat-in kitchen
Laundry room
Basement
Fireplace
Air conditioning
Wall-to-wall carpet
Hardwood floors
View
Many people do not realize that the capital gains rules
concerning your principal residence have changed. The new rules
may make it easier for you to own the lake home of your dreams.
Remember to check with your tax advisor before making a
decision based on this information since I am not qualified to
give tax advice.
Understanding Capital Gains in
Real Estate
When you sell a stock, you owe taxes on your gain-the
difference between what you paid for the stock and what you
sold it for. The same is true with selling a home (or a second
home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid
for the home, but on its adjusted cost basis. To calculate
this:
1. Take the purchase price of the home: This is the sale
price, not the amount of money you actually contributed at
closing.
2. Add adjustments:
Cost of the purchase-including transfer fees, attorney fees,
inspections, but not points you paid on your mortgage.
Cost of sale-including inspections, attorney’s fee, real estate
commission, and money you spent to fix up your home just prior
to sale.
Cost of improvements-including room additions, deck, etc. Note
here that improvements do not include repairing or replacing
something already there, such as putting on a new roof or
buying a new furnace.
3. The total of this is the adjusted cost basis of your
home.
4. Subtract this adjusted cost basis from the amount you
sell your home for. This is your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a
married couple) on the sale of a home is exempt from taxation
if you meet the following criteria:
You have lived in the home as your principal residence for
two out of the last five years.
You have not sold or exchanged another home during the two
years preceding the sale.
Also note that as of 2003, you also may qualify for this
exemption if you meet what the IRS calls “unforeseen
circumstances,” such as job loss, divorce, or family medical
emergency.
Reprinted from REALTOR® Magazine Online by permission of the
NATIONAL ASSOCIATION OF REALTORS®
Copyright 2005. All rights
reserved.
www.REALTOR.org/realtormag
10 Things to Take the Trauma Out
of Homebuying
1. Find a real estate professional who’s simpatico.
Homebuying is not only a big financial commitment, but also an
emotional one. It’s critical that the practitioner you choose
is both skilled and a good fit with your personality.
2. Remember, there’s no “right” time to buy, any more
than there’s a right time to sell. If you find a home now,
don’t try to second-guess the interest rates or the housing
market by waiting. Changes don’t usually occur fast enough to
make that much difference in price, and a good home won’t stay
on the market long.
3. Don’t ask for too many opinions. It’s natural to
want reassurance for such a big decision, but too many ideas
will make it much harder to make a decision.
4. Accept that no house is ever perfect. Focus in on
the things that are most important to you and let the minor
ones go.
5. Don’t try to be a killer negotiator. Negotiation is
definitely a part of the real estate process, but trying to
“win” by getting an extra-low price may lose you the home you
love.
6. Remember your home doesn’t exist in a vacuum. Don’t
get so caught up in the physical aspects of the house
itself-room size, kitchen-that you forget such issues as
amenities, noise level, etc., that have a big impact on what
it’s like to live in your new home.
7. Don’t wait until you’ve found a home and made an
offer to get approved for a mortgage, investigate insurance
availability, and consider a schedule for moving. Presenting an
offer contingent on a lot of unresolved issues will make your
bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your
post-homebuying budget. Even if you buy a new home, there will
be some costs. Don’t leave yourself short and let your home
deteriorate.
9. Accept that a little buyer’s remorse is inevitable
and will probably pass. Buying a home, especially for the first
time, is a big commitment, but it also yields big benefits.
10. Choose a home first because you love it; then think
about appreciation. While U.S. homes have appreciated an
average of 5.4 percent annually from 1998 to 2002, a home’s
most important role is as a comfortable, safe place to
live.
Reprinted from REALTOR® Magazine Online by permission of the
NATIONAL ASSOCIATION OF REALTORS®
Copyright 2005. All rights
reserved.
www.REALTOR.org/realtormag
20 Low-Cost Ways to Spruce Up
Your Home
Make your home more appealing for potential buyers with
these quick and easy tips.
1. Trim bushes so they don’t block windows and cut down
on light.
2. Buy a new doormat.
3. Put a pot of bright flowers (or a small evergreen in
winter) on your porch.
4. Put new doorknobs on your doors.
5. Put a fresh coating on your driveway.
6. Edge the grass around walks and trees.
7. Keep your garden tools out of site.
8. Be sure kids put away their toys.
9. Buy a new mailbox.
10. Upgrade the outside lighting.
11. Use warm, incandescent light bulbs for a homey
feel.
12. Polish or replace your house numbers.
13. Clean your gutters.
14. Put out potpourri or burn scented candles.
15. Buy new pillows for the sofa.
16. Buy a flowering plant and put it in a window you pass
by frequently.
17. Make a centerpiece for your table with fruit or
artificial flowers.
18. Replace heavy curtains with sheer ones that let in
more light.
19. Buy new towels.
20. Put a seasonal wreath on your door.
Reprinted from REALTOR® Magazine Online by permission of the
NATIONAL ASSOCIATION OF REALTORS®
Copyright 2005. All rights
reserved.
www.REALTOR.org/realtormag
Common Closing Costs for
Buyers
The lender must disclose a good faith estimate of all
settlement costs. A check to cover your closing costs will
probably have to be a cashier’s check. The title company or
other entity conducting the closing will tell you the required
amount for:
* Downpayment
* Loan origination fees
* Points, or loan discount fees, you pay to receive a
lower interest rate
* Appraisal fee
* Credit report
* Private mortgage insurance premium
* Insurance escrow for homeowners insurance, if being paid
as part of the mortgage
* Property tax escrow, if being paid as part of the
mortgage. Lenders keep funds for taxes and insurance in escrow
accounts as they are paid with the mortgage, then pay the
insurance or taxes for you.
* Deed recording fees
* Title insurance policy premiums
* Survey
* Inspection fees-building inspection, termites, etc.
* Notary fees
* Prorations for your share of costs, such as utility
bills and property taxes
A Note About Prorations: Because such costs are usually paid
on either a monthly or yearly basis, you might have to pay a
bill for services used by the sellers before they moved.
Proration is a way for the sellers to pay you back or for you
to pay them for bills they may have paid in advance. For
example, the gas company usually sends a bill each month for
the gas used during the previous month. But assume you buy the
home on the 6th of the month. You would owe the gas company for
only the days from the 6th to the end for the month. The seller
would owe for the first five days. The bill would be prorated
for the number of days in the month, and then each person would
be responsible for the days of his or her ownership.
Reprinted from REALTOR® Magazine Online by permission of the
NATIONAL ASSOCIATION OF REALTORS®
Copyright 2005. All rights
reserved.
www.REALTOR.org/realtormag
What Sellers Net at
Closing
To find out how much money you’ll net from your house, add
up your closing costs and subtract them from the sale price of
the house.
Closing Costs for Sellers
Mortgage payoff and outstanding interest
Prorations for real estate taxes
Prorations for utility bills, condo dues, and other items paid
in arrears
Closing fees charged by closing specialist
Title policy fees
Home inspections
Attorney’s fees
Survey charge
Transfer tax or other government registration fees
Brokerage commission
Total
Reprinted from REALTOR® Magazine Online by permission of the
NATIONAL ASSOCIATION OF REALTORS®
Copyright 2005. All rights
reserved.
www.REALTOR.org/realtormag
Bonus Article- Lake homes and log cabins
often go together. This is a fairly technical article written
by a well-known home inspector which will give you lots of
information and things to think about.
Log Home Basics
Log homes may be site-built or pre-cut in a factory for
delivery to the site. Some log home manufacturers can also
customize their designs. Before designing or purchasing a
manufactured log home, you need to consider the following for
energy efficiency:
The R-Value of Wood
In a log home, the wood helps provide some insulation.
Wood's thermal resistance or resistance to heat flow is
measured by its R-value. The higher the R-value, the more
thermal resistance.
The R-value for wood ranges between 1.41 per inch (2.54 cm) for
most softwoods and 0.71 for most hardwoods. Ignoring the
benefits of the thermal mass, a 6-inch (15.24 cm) thick log
wall would have a clear-wall (a wall without windows or doors)
R-value of just over 8.
Compared to a conventional wood stud wall [31 D2 inches (8.89
cm) insulation, sheathing, wallboard, a total of about R-14]
the log wall is apparently a far inferior insulation system.
Based only on this, log walls do not satisfy most building code
energy standards. However, to what extent a log building
interacts with its surroundings depends greatly on the climate.
Because of the log's heat storage capability, its large mass
may cause the walls to behave considerably better in some
climates than in others. Logs act like "thermal batteries" and
can, under the right circumstances, store heat during the day
and gradually release it at night. This generally increases the
apparent R-value of a log by 0.1 per inch of thickness in mild,
sunny climates that have a substantial temperature swing from
day to night. Such climates generally exist in the Earth's
temperate zones between the 15th and 40th parallels.
Minimizing Air Leakage in Log Homes
Log homes are susceptible to developing air leaks. Air-dried
logs are still about 15-20% water when the house is assembled
or constructed. As the logs dry over the next few years, the
logs shrink. The contraction and expansion of the logs open
gaps between the logs, creating air leaks, which cause drafts
and high heating requirements. To minimize air leakage, logs
should be seasoned (dried in a protected space) for at least
six months before construction begins. These are the best woods
to use to avoid this problem, in order of effectiveness:
• Cedar
• Spruce
• Pine
• Fir
• Larch
Since most manufacturers and experienced builders know of these
shrinkage and resulting air leakage problems, many will kiln
dry the logs prior to finish shaping and installation. Some
also recommend using plastic gaskets and caulking compounds to
seal gaps. These seals require regular inspection and resealing
when necessary.
Controlling Moisture in Log Homes
Since trees absorb large amounts of water as they grow, the
tree cells are also able to absorb water very readily after the
wood has dried. For this reason, a log home is very
hydroscopic-it can absorb water quickly. This promotes wood rot
and insect infestation. It is strongly recommended that you
protect the logs from any contact with any water or moisture.
One moisture control method is to use only waterproofed and
insecticide-treated logs. Reapply these treatments every few
years for the life of the house. Generous roof overhangs,
properly sized gutters and downspouts, and drainage plains
around the house are also critical for moisture control.
Building Energy Code Compliance for Log Homes
Because log homes don't have conventional wood-stud walls
and insulation, they often don't satisfy most building code
energy standards-usually those involving required insulation
R-values.
However, several states-including Pennsylvania, Maine, and
South Carolina-have exempted log-walled homes from normal
energy compliance regulations. Others, such as Washington, have
approved "prescriptive packages" for various sizes of logs, but
these may or may not make sense in terms of energy efficiency.
The American Society of Heating, Refrigerating, and Air
Conditioning Engineers (ASHRAE) 90.2 standard contains a
thermal mass provision that may make it easier to get approval
in those states that base their codes on this standard. To find
out the log building code standards for your state, contact
your city or county building code officials. Your state energy
office may be able to provide information on energy codes
recommended or enforced in your state.
Building & Restoration of Log Cabins
Foundation
The foundation of a log cabin is made of stone pillars. The
stones provide a sturdy base to support the cabin and act as a
barrier between the cabin and the earth. The stones may settle
over time and the foundation is carefully examined for damage
or wear and subsequently repaired during restoration.
Wall Construction
The walls are made of logs, placed either vertically or
horizontally, depending on the style and size of the cabin. The
logs are notched at the corners to allow them to fit together.
Corner notching is a notable characteristic of log cabin
construction because it provides stability by locking the log
ends in place, enabling the logs to fit together in a secure
manner. Many different methods of corner notching exist,
ranging from simple "saddle" notching to the common "V"
notching or "steeple" notching, which get their name from the
shape of the notch cut into the wood. These notching methods
are marked by a cut into the wood that allows another cut piece
of wood to fit together like a puzzle piece. Another commonly
used technique, "square" notching, differs in that the logs are
secured with the addition of pegs or spikes.
The number of logs used per wall varies with the size of the
cabin. The spaces between logs are usually filled with a
combination of materials in a process known as "chinking" and
"daubing." This process seals the exterior walls, protecting
them from weather and animal damage.
Roof
Log cabin roofs are often gabled and are comprised of
hand-split, wood shingles. The roofs often develop damage and
leaks over the years and are commonly included in
restoration.
Doors
Many log cabins have both a front and rear door. Due to the
many times the doors are opened and closed over the years, the
doors are often not in good working order and require repair
during restoration. Both doors on the cabin can be comprised of
boards that are hand-dressed, open inward and are fastened to
the log structure with pegs.
Windows
The cabin features two windows, located on either side of
the chimney. The windows hold glass panes, which most likely
need to be replaced during the restoration of the cabin.
Chimney
The cabin has a chimney that sank and deteriorated into many
different pieces over the years. The chimney was rebuilt during
cabin restoration.
Definitions:
Handcrafted log home
A home that is constructed of logs that are individually fit
together.
Milled log home
Constructed of machine-lathed logs, and is also used to
describe a log home built from a kit.
Insulated log home
Constructed with half-logs attached to a standard 2x6 frame
structure.
Chinking
The mixture used to fill the gaps between logs - can be natural
materials or synthetic.
Shrinking
The normal loss of diameter in logs as they lose moisture.
Settlement
The downward movement of log courses as the logs shrink.
Checking
The natural cracking of logs as they shrink.
Butt joints
Occur when two logs are placed end-to-end.
Log course
One layer of logs placed atop the entire foundation of the
home.
Log wall exterior
The inspector shall inspect exterior surfaces of log walls,
when such surfaces are visible, looking for:
• presence of mold, mildew or fungus
• cracks located at tops of logs and facing up
• discoloration, graying, bleaching or staining of
logs
• loose or missing caulking
• separation of joints
• condition of chinking, to include cracking, tears,
holes, or separation of log courses
• condition of log ends
Log wall interior
The inspector shall inspect interior surfaces of log walls,
when such surfaces are visible, looking for:
• separation between logs, including light or air
penetration from outdoors
• separation between exterior log wall and interior
partition walls
• separation between log walls and interior ceilings
Other exterior concerns
In addition to the items specified in NACHI Standards of
Practice 2.1 and 2.2, the inspector shall inspect:
• downspout extensions
• grading and water flow away from log walls
• vertical support posts under and on all porches
Other interior concerns
In addition to the items specified in NACHI Standards of
Practice 2.4 and 2.6, the inspector shall inspect:
• Slip joints, adjustable sleeves, looped water supply
lines, flexible hose sections, and flexible ductwork that are
visible as part of the standard heating and plumbing
inspections.
Exclusions
The inspector is not required to:
• inspect or predict the condition of the interiors of
logs
• predict the life expectancy of logs
• climb onto log walls. However, the inspector may inspect
log walls by use of a ladder, if this procedure may be done
safely and without damaging the walls.
• inspect components of the porch support system, or of
the plumbing or heating systems, that are not readily visible
and accessible.
Courtesy of Tim
Oglesby
Home Check America
866-245-4663
www.homecheckamerica.com
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