real/diaBlog - boldly saying what others won't about Real Estate

Is Congress Trying to Undermine a Real Estate Recovery?

Maybe it is just me but if I was a buyer in today's real estate market and I heard that Congress was trying to increase the $8,000 first time buyer tax credit to $15,000 and include all home buyers, I would seriously consider holding off on making a purchase.  Why you ask?  Well, there are many different reasons and they all stem from the uncertainty of what Congress will eventually do, if anything.  

Congress is notorious for floating out many different versions of a bill and then watering down one of them in order to get it passed by both the Senate and the House of Representatives and then get signed by the President.  This causes many great ideas and sound solutions to become ineffective and a waste of time.  

We don't have to look any further than the current $8,000 tax credit.  At one point it was a $15,000 credit that would have been available to all buyers.  But that bold, decisive bill that would have had a tremendously larger impact on home sales was weakened and become the current credit that has already had one major change and is set to expire on December 1st.  And there is no sign that the credit has done anything to improve the housing market.

So now they are considering either extending the current credit for another year, increasing the size to $15,000, adding a $3,000 credit for refinances and/or letting all home buyers get the credit.  And there is no indication of whether or not the new limits and credits will be retroactive and how far back they will go.  

The last credit was retroactive to Jan 1st when it was signed into law as part of the stimulus package in the middle of February.  How far back they make the next credit is anyones guess.  And that is the problem.  What if they pass the bill and don't make it retroactive?  What if the actually bill gets debated and changed and watered down again and doesn't get passed until the fall?  What then?

What should a prospective buyer do if they want the full $15,000 credit and want to be guaranteed they get it if in fact that is what Congress passes?  They have to wait and see.  That is the only way to guarantee you get the credit because no one knows what will happen.  The people that bought a home last year have to pay back their tax credit because they didn't wait.

Congress cannot make swift, decisive moves that will help the economy.  Congress doesn't do what is right, they do what will get them re-elected.  They need to answer to special interests, not constituents because special interests give them the money to get re-eleted.  Congress can't make hard decisions and instead they have partisan battles and pass bills with partial solutions that are ineffective.  

And this latest battle over the tax credit will showcase Congress at its finest, working to confuse the public, change the rules, cut some people out and create another finger pointing debacle.  Much like the TARP that didn't buy any toxic assets and a stimulus bill that doesn't stimulate.

I ask again, is Congress trying to undermine a real estate recovery?  I say yes.

UPDATE:  I will be at a function this Friday with Rep. Frank Wolf (R), the congressman for my district here in Northern Virginia.  I will try and corner him and ask him some pointed questions regarding the tax credit and efforts to help the housing recovery instead of continuing to create indecision in the minds of the public.

Get Your Brokers License You Slacker

Last Tuesday I signed up for the online version of the Virginia Brokers Licensing Class.  It represents 180 credit hours of real estate education.  It is one of the steps needed to get a brokers license.  The other two steps are:

1.  Actively engage as a real estate salesperson for 36 of the previous 48 months.

2.  Pass the exam

I just finished the 180 credit hours today.  In my case it turns out that 180 credit hours is in actuality about 30 hours, maybe a little less.

There is no excuse for any active agent in Virginia that has been in the business for 3 years or more to not have their brokers license.  

I finished all the practice exams and read over 400+ questions and explanations.  Time is not an issue.  It cost $850.  That should not be an issue unless you aren't actully selling houses.  I did it in my house.  Getting to the class is not an issue.  No excuse works except for you are a total slacker.

Bing, I'm In and So Should You

Last week my Google Reader sent me a post written by Karl L. Gechlik of  makeuseof.com .  I get more good tech tips from this site than any other I subscribe to.  His post is one of the better ones for the non-geek bloggers out there on how to submit your site to Google.  But the reason I liked it was it has the link to submitting your site to the new Bing search site from Microsoft.

How To Submit Your Website To Bing & Google For More Traffic

If you have a blog and you haven't submitted your site to Google yet, than you definitely need to immediately.  And if you haven't submitted it to Bing, I suggest you do so sooner rather than later.  I am already seeing an increase in traffic from organic searches on Bing.

Update:  Here is another reason to submit your site to Bing.  

Bing Continues Taking Share

As Goes California, So Goes the United States

A wise man once told me "As goes the California economy, So goes the US economy".  With California such a large part of our economy, it only makes sense that until that state gets its act together, the country will continue to languish.  And by the looks of it, that isn't going to happen for quite some time.  And it also looks like the federal government is in no hurry to help out.

That same wise man also said that "As housing goes, so goes the economy".  That is another reason why this recession/depression will continue as long as President Obama wastes time on issues such as health care and green energy.

Think about it.  What is our biggest expense every single month?  Housing.  What is the biggest concern that most people have every day?  Housing.  What is the one area that has been the biggest drag on our economy for 3 years.  Housing.  And the biggest drain on consumer confidence?  The price of our houses going down with no end in sight.  

Yet Obama continues to push for national health care and green energy.  Does that matter if you are facing foreclosure?  When you are selling your house short to move into a tiny apartment?  When you have no more equity in your house and no hope for every getting back to zero?  When the majority of baby boomers are going to work until they die because the equity in their homes and retirement accounts are at zero.  How are they going to afford nationalized insurance and an electric car.

Am I missing something?

Top Ten Reasons I Love Short Sales

Don't get me wrong, I don't like the idea of a short sale.  The thought of people losing hundreds of thousands of dollars on the American Dream of homeownership (isn't that what NAR advertises) is horrible for the economy, horrible for neighborhoods and will leave scars for many years to come (way to go Dale). 

But as a real estate professional who has been through the ups and is going through the downs, short sales represent an amazing opportunity.  And here are the top ten reasons why....

10.  They are everywhere.  As an agent working with buyers, there is a ready supply of short sales to choose from at very good prices.

9.  Lazy agents hate them.  And that means competition is low for listing them as well as for buying them.

8.  Inept agents screw them up.  You have to be organized and thorough as well as patient with short sales and these are not qualities that most agents posess.  But I hired an assistant that loves this kind of work.

7.  Sellers don't fight the price.  When the bank is taking the hit, most sellers have no problem getting to the right price.

6.  Short sales are here to stay.  With prices down 30% or more in most areas of the country (including my marketplace of Loudoun County), most people who bought or refinanced and used their house as an ATM during the last 6 years are potential short sales.  And prices won't be bouncing back anytime soon.

5.  Banks agree to 6% in most cases.  After years of fighting tooth and nail to make 4.5% and give 3% to the buyers agent, it is nice to get paid for the 30 hours of work I do to get a short sale approved.

4.  The alternative is Foreclosure.  And that is way worse than selling your house short.  Most people can get another home loan in 18-24 months if they work at it.

3.  Short Sale Buyers love the deals they get.  It takes a lot of patience and hand holding and waiting but once they settle, buyers are very happy.

2.  Debt relief for 10 cents on the dollar.  If done correctly, a seller can eliminate all the debt associated with the home for as little as 10 cents for every dollar that they owe.  Most banks will be happy to get that on a worthless second loan.  And the relief that comes with eliminating that burden is huge.

1.  Sellers always appreciate what you do.  I have sold many homes short and worked a minimum of 30 hours on each one.  I send 100 page faxes on a regular basis.  I spend hours on hold.  I fight with indifferent employees of banks and incompetent agents.  But the appreciation I receive from the sellers at closing is worth it.  And they always seem to have referrals.

Successful Bloggers Pay Attention to other Bloggers

The name of the paper is Blogs and the Economics of Reciprocal Attention.  What it says is that the most successful bloggers will participate in their blogging network more than those that do not.  Blogs that link to other blogs and bloggers that comment on other blogs are cited as ways to reciprocate.  Hat tip to Freakonomics (even though they talk bad about real estate agents).

I have always taught the people just getting into the blogosphere that they must read and comment on other blogs 5 times as much as they write on their own.

But Do You Even Sell Real Estate?

In the past couple of months I have attended seminars given by other real estate professionals and I have been asked to sign up for other seminars given by industry professionals.  The subjects have ranged from social networking and technology to short sales, listing presentations and market conditions. 

After one of these seminars I went back to my computer and looked up the names of the expers on the panel and pulled up their production for the past 15 months.  Turns out that 4 out of 5 experts on the panel have sold 5 homes or less in the past 15 months.  And one of the experts had sold no houses whatsoever.  Now don't get me wrong, they probably know a lot about the the topic they are talking about.  But there is a huge difference between knowing about something and actually being able to put it into practice.

And I think that in the world of real estate the difference between reading about a technique or talking about how to do something and actually being able to apply it to a real life real estate transaction is much wider than people would have you believe.  And I think the lack of actual sales by experts is indicative of this gap.

I would therefore encourage you to question the abilities of the experts you are relying on to teach you how to apply their knowledge to the actual sale of real estate.  I would encourage you to ask for proof of their abilities.  I would encourage you to research their track records and claims to see if they are able to put into practice the skills and techniques and tools they are asking you to use to sell real estate. 

Brokers Suck, Retirement Plans are Ponzi Schemes and Other Tidbits

Jolenta Averill wrote a great post over at Bloodhound about Big Brokerage and how they take and take and take from the agents and give very little in return.  I agree wholeheartedly.  I quit my big brokerage firm (Keller Williams) in December 2007 and couldn't be happier.

Brian Bolero writes a good article about how technology has essentially changed nothing in the world of real estate when it comes to commission rates, fsbos and approval ratings.  Makes you think.

Not that this has anything to do with real estate but if pension plans such as social security and state pension plans like New Jersey have less in their accounts than they owe, isn't that a form of a Ponzi scheme.  I think the people in charge of those programs should be put in jail just like Bernie Madoff, because one day they will run out of money and the people that put their money in will have nothing.  It is inevitable.

I have been working on a digg site for real estate called realdiggity.  Hopefully you find it a good source of real estate news, blogs etc.  I welcome your participation.  It is still in the development stages but I think you can send your clients there to keep up on stories that will direct influence their decisions when it comes to real estate issues.

Some quick thoughts on a sunny Saturday in Loudoun County Virginia.

Attention Agents - 3 Steps to REDUCE YOUR TAXES

Today is April 16th, the day after Tax Day.  And if you are a real estate professional, chances are you had to write a check to the Department of the Treasury because you didn't pay enough of your quarterly estimated taxes or you didn't pay them at all.  I have done this before and it is not fun.

But this year is different.  I actually paid my taxes on time.  I paid almost exactly the correct amount.  

And the I paid less in taxes this year than any other year before.  And no, not because I made less but because I did three very important things.  

MEET WITH A TAX ADVISOR

Last year about half way through the year I decided that I didn't want to pay as much in taxes.  The first step was to meet with a tax advisor and a good bookkeeper.  I explained to them my business, showed them previous taxes and asked them what they could do and I could do to reduce my tax rate and improve my planning.  Just like homeowners should hire a real estate professional to sell their house, a real estate professional should hire a tax professional.

INCORPORATE

The first thing the tax advisor told me to do was incorporate.  This would allow me to drastically reduce my self employment tax which always seemed to be the bulk of my tax bill.  Incorporating will also allow you to write off a lot more of your expenses that have to do with your real estate business.  Incorporating my business allowed me to reduce my tax rate from approximately 20% last year to 8.7% this year.  If you are not paying less than 10% in taxes and you are selling real estate as a full time professional, you are paying too much.

KEEP BETTER RECORDS

This was the hardest thing for me to do so I hired someone to do it on a monthly and quarterly basis.  I bought the software and I send them all my bills, receipts, account statements and anything else that has to do with my business.  They prepare everything and I get the reports.  Not only does it allow me to spend more time on my real estate business but it allows me to focus on making my business more efficient.  It allows me to see where the money is spent and how the money comes in.  It allows me to better plan.  A good bookkeeper is relatively inexpensive and worth every penny.

These are the things I did to reduce my taxes and by no means is this tax advise.  But you might want to look into a couple of these things if you want to pay less next year to the government and keep more for yourself.

2009 Is the Year of the Video

2007 was the year of the Blog....2008 was the year of Social Media....and 2009 will be the year of the Video in the world or Real Estate 2.0.

And the best tool for a Real Estate agent that wants to add video to their blog and to their facebook account and create a youtube video channel is the Flip Mino HD.  I got mine a couple of weeks ago and making quick 4 minute video blog posts couldn't be easier. 

I had a Sony video camera that cost $400 that I only used to make 3 videos in 18 months.  I just finished my 4th video post this month on my local real estate blog because the Flip Mino HD makes it so much easier to download and upload.  It takes a total of 15 minutes from the time I shoot a video until I have it embedded into a blog post.

And I am getting direct inquiries from my video posts from buyers and sellers in my market place.  So this year I am going to add video to my blog and social networking to increase the reach I have in the marketplace.

UPDATE:  I just added this video to show how quick and easy it is to shoot a video and post it on your blog.  It took 18 minutes.

Fannie Mae Bailout, Mortgage Meltdown Predicted in 1999

This article in the NY Times in 1999 talks about the loosening of lending standards at Fannie Mae and then goes on to describe what could happen if the increased risk of sub-prime lending went wrong. 

It is almost scary how accurate the predictions are.

Click here for a full screen view of the article.
Fannie Mae Loosens Standards - 1999 - Free Legal Forms

Social Media and Blogging For Business Presentation

Today I am presenting at a workshop sponsored by Marymount’s MBA/IT program.  I will be discussing real world application of social media and blogging to the attendees.  The program is put together by Ken Fischer of ClickforHelp.

I have decided to publish my presentation as an example of the power, speed and versatility of blogging platforms.

Social Media and Blogging for Business - Free Legal Forms