Finance | Blog

Buying and selling in the temporary normal

Posted on May 29, 2020April 7, 2020 by Victor Varma

With all of this extended time spent homebound recently, many of us have discovered a new truism: if you have to be quarantined, you might as well do it in your dream home.

No matter what — the season, the economy, even a virus — people will continue to buy and sell houses. It’s only the process that changes. And buyers and sellers who can adapt and pivot are the ones who come out ahead.

Fortunately, real estate professionals are already adept at strategies that could prove especially helpful this year, as COVID-19 dominates the news.

Think: technology. Virtual tours will likely increase in popularity. Buyers were already screening houses online before seeing them in person, and a thorough virtual tour could dramatically increase the number of eyes on your property.

A 2018 report by the National Association of Realtors (NAR) said that 46 percent of buyers found a virtual tour very useful, while 74 percent used the internet to search for homes. Among millennials, that figure leaped to 92 percent.

Some other accommodations this year could include:

Sellers may request more hand-washing. Another NAR survey, this one in March, found that more sellers were requesting that visitors wash their hands or use sanitizer. (Some may also request the use of booties, a commonplace request already.)
Open houses may limit the number of people inside a home at one time – which probably makes for a more pleasant walk-through anyway.
Technology can also aid in brokering a deal. Already, contracts are regularly sent via email and signatures can be gathered online. Expect more of this.
Those who attend open houses in the coming months are more serious buyers, as the tire-kickers have opted to stay at home.

Relief for 401(k) withdrawals

Posted on May 22, 2020April 7, 2020 by Victor Varma

The new coronavirus relief bill relaxes rules on 401(k) withdrawals for those affected by the virus.

Savers would be able to take a hardship distribution of up to $100,000 from their 401(k) accounts without a 10 percent early withdrawal penalty. That works for those who are laid off and want the money for mortgage payments, for example. Warning: withdrawals are not tax free.

Retirees who don’t need distributions from their accounts can suspend the required minimum for all of 2020.

Many retirees have found that the value of their accounts has dropped dramatically. Leaving money in place allows their investments to recover as the virus crisis eases and the economy recovers.

The withdrawals are not tax-free, however; the bill gives you three years to pay the taxes on the withdrawals, according to CNBC.

Relief Bill: How should I use the money?

Posted on May 15, 2020April 7, 2020 by Victor Varma

In late March, the U.S. Congress passed a $2 trillion economic rescue plan, dubbed the CARES Act, to provide relief to Americans impacted by the COVID-19 pandemic.

The bill included cash payments to individuals, increased unemployment insurance benefits, changes to student loans and to retirement account rules, among others.

The amount of the payments varied by income, but most people fell into these categories: single adults with an adjusted gross income of $75,000 or less would receive $1,200, while married couples with no children who are earning $150,000 or less would receive $2,400. An additional $500 per dependent was also included. You do not have to pay income tax on the payment.

If you’re in a situation where you have a choice how to spend it (i.e. you’re able to use it for discretionary purposes instead of rent/mortgage/food), what should you do? Market Watch had some ideas after polling financial experts:

Put it into an emergency fund account. A rainy-day account should cover three to six months of expenses and some online savings accounts can offer annual percentage yields of 1.5 to 1.7 percent.
Pay down debt. Experts recommend putting it toward high-interest debt like credit cards and waiting on student loans to see what might come of other relief efforts.
Invest – but cautiously. True, some people can benefit from a quick flip. No one but a trusted investment advisor should recommend stocks. But some ideas are equities, a long-term strategy; investing in companies like virtual learning, grocery stores, and Esports; or even an exchange-traded fund (ETF), which is a basket of securities that you can buy and sell through a broker.
Donate. If you’re in a position to donate some of your payment, food banks and other charities will need an influx for some time. Animal charities expect to be hard hit as their donors scramble to shore up their finances.