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When an agent shoves paper under your nose to sign, seal and deliver on your next real estate contract, remember, it’s because Aunt Virginia or Uncle Tex(as) is requiring your John Hancock, not the agent. There are 50 ways to do real estate in the United States, because real estclickheredrawingate licensing and practices are governed by state law (even though there is an overlay national standard as well).

Trust me – when we have a contract in Northern Virginia of 16 pages, and 250 blanks and boxes to fill out – we’re not looking for some creative means of getting our clients to sign in one more spot for our health or amusement.

Signatures are required by state commissions to make sure YOU are informed and understand what it is you’re signing. You will have three classes of documents to sign along the way to buying or selling your next home. 

1- Disclosures. Do you know if the house you’re interested in is next to a pig farm? States have various levels of disclosures and forms that inform consumers. The disclosure is not a binding document, just a disclosure. Some of them provide buyers opportunity to cancel a contract after a certain number of days if they don’t like what is being disclosed, some don’t. 

2- Agreements. These are between you and your agency. The agreement to list your home, work in a buyer agency relationship, etc. these are binding, and will have various ways to be enforced and/or cancelled. 

3- Contracts. These are the big documents. You’re deciding to sell your house to another person and what you’re signing puts you on a track to turn over the keys in exchange for thousands of dollars. These documents are loaded with promises, accountability and legal requirements for all parties on the contract. 

While electronic signatures have simplified the process of signing, box checking and initialing – be sure you know what you’re “clicking” through – don’t be so quick to click when you don’t understand the contract or addenda that is managing the exchange of what is for most people – the most expensive transaction in their lives.

Until next time…

Anthony Carr started in the real estate industry as a real estate editor, and finally switched over to working in the business in 1995. He quickly built his business through a close-knit group of advocates of friends, past clients and business associates. To this day he works by referral to help people sell, buy and invest in real estate

He’s the author of “Real Estate Investing Made Simple: A commonsense approach to building wealth”; (take a look at chapter one right here) and he was a contributing writer to Donald Trump’s book, “The Best Real Estate Advice I Ever Received.

Hey Gang – just thought I’d let all y’all know I haven’t fallen off the cliff and why no content?? New company, new position, new view of life! Now I’m at Keller Williams Realty in Falls Church VA – as the Director of Training and Productivity. We have 150+ agents – 50 recruited just this year – and that’s where I come in to train them up, get them profitable! Are you looking to launch a real estate career in 2016?

Experienced agents – are you looking for a switch to a company that has Mission, Vision, Values, Beliefs and Perspective!? Visit me at http://www.anthonycarr.net to send a confidential note.

 

My company has listed or sold about 1,000 short sales in the last year just in the Washington, D.C. area. The biggest problem in dealing with these transactions is the lack of education and understanding on both the consumer’s and agent’s perspective.

For my agents, OF COURSE, they know exactly what a short sale is, what it isn’t and how to handle it! What’s most frustrating is how our colleagues WANT it to operate, versus the way it really should be according to the contract.

First – let’s start with just a couple facts of what Short Sales Are NOT –

  • The contract is NOT with the bank, but between the owner of the house and the buyer. Once they agree to terms, it is “ratified.”
  • Once the house is “ratified” (meaning, the buyer and seller have agreed on the terms of the contract), the house is NO longer AVAILABLE and should be registered as Under Contract, or Under Contract with contingency (depending on the practice in your area).
  • All other offers, while they should be presented to the SELLER, are supposed to be considered “back ups” to the primary offer.
  • A “back up” offer is not required to be brought to the bank for 3rd party approval when the contract is ALREADY ratified.

And now here’s what a short sale IS:

  • The owner owes more than what the house is worth AND cannot pay the deficit between those values AND the bank is willing to take less in payment than the mortgage amount.
  • While it may not be as bad as a foreclosure, it is a negative hit to your credit.
  • For a limited amount of time, those who go through a short sale MAY have some tax relief.

The Internal Revenue Service web site states:

“If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.”

“The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

“This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.” See more information from Publication 4681. http://www.irs.gov/pub/irs-pdf/p4681.pdf

If you’re thinking of short selling because your home has lost so much value – you have a limited amount of time to do so without carrying a heavy financial toll.

But understand that not all agents are created equal and the minority actually know what they are doing. While some associates are selling the majority of their short sales, the industry average in the mid-atlantic area is less than 50% actually making it to settlement.

Until next time…

Virginia Association of RealtorsHere are the basics:

How Much:

  • First Timers: Up to $8,000 (10% of home purchase) but not for anyone buying a house more than $800,000
  • Move Up Seller/Buyer: Up to $6,500

Who?

  • First Timers – meaning you haven’t held title on a property in the previous 3 years.
  • Move up sellers/buyers: who have lived in their homes five consecutive years.

Income Limit:

  • Adjusted gross income of $125,000 (single); or $225,000 (married filing jointly). The credit fades out from these incomes and is elminated for those making more than $145,000 (single); or $245,000 for married filers.

Check out this link from the Virginia Association of Realtors for more details: http://www.varealtor.com/Portals/0/docs/ConsumerInformation/EXTENDED_First-Time_Home_Buyer_Credit_09.pdf

How would you like to make money paying someone else’s real estate taxes? There’s a little-known investment opportunity available in 31 states where investors can put up as little as a couple hundred dollars to get in on the action.

You’re probably thinking: “I pay enough taxes as it is, why would I want to pay someone else’s taxes, too?”

Well, how does an annual interest return from 18 to 50 percent sound?

These returns are available through tax lien and tax deed certificates sold throughout the country on a county basis. Tax liens are what the local government places on properties where real estate taxes are late. Figuring that they won’t get that money right away, the local government auctions off the lien to investors once or twice a year. These are called “tax sales.”

If owner Smith owes $2,000 in real estate taxes and hasn’t paid it, the county will place a lien on his property and then auction that lien to an investor. The investor gets the lien for $2,000 and the county gets the money it needs right away to pay its ongoing expenses. Meanwhile, the treasury or finance department then starts going after the money from the delinquent tax payer.

They send nasty little notes, warning them of further action and placing stiff penalties and interest charges on the tax. These interest charges can be as high as 50 percent — and that’s how the local government can then turn around and pay these investors 16, 18, 20 percent and more.

The place to find these nifty investments is at the local treasury or finance department. There are also web sites where the information has been compiled. You could end up paying as much as $39 per state for the information or, as on one site I visited, $49 for the whole country (encompassing 3,300 counties).  www.taxliens.com is a good place to start.

Since more than likely you’re going to go after local liens to start with, save yourself the money and just contact your local treasury or finance department. If you don’t know where that is, then just call the main information number for your county or city and ask for the tax department — they can help you from there. An easy search online would be: “<local county> tax liens”.

Basically, these are short-term investment opportunities. After the lien has been auctioned off, the county lets the owner know that they may lose their property to the tax lien certificate holder if they don’t pay the taxes — and now taxes, interest and penalties. This gives the property owner another opportunity to redeem the tax bill and keep his/her property. If they don’t, then the tax lien certificate holder can foreclose on the property.

In some areas, instead of a foreclosure, the government actually sells you a tax deed to the property — meaning if the taxpayer doesn’t pay the taxes, you become owner of the property straight out.

There are the amazing stories about people hitting it rich in these tax sales. There’s one floating around about a gentlemen in Tulsa, Oklahoma who paid $17 at a tax sale for a property he then sold for $4,400 and another where the property was bought for $298 in back-taxes and sold for $8,450.

It’s also true that each year people are hit by lightning. There are risks and hazards with tax certificates. The property might be trashed, you could lose your investment by not following procedures, title may be weak, and — let’s face it — former owners may be both irate and well armed.

Because the liens are auctioned, a hot property might only be available with unattractive terms. In some jurisdictions, you may “win” the property but then be responsible for all unpaid taxes and mortgages. If you have to foreclose, that may result in another round of costs. In some jurisdictions, the owner may have an “equity of redemption” right that allows him or her to re-acquire the property after a foreclosure action.

Be aware of these and other risks and act accordingly. Investors must carry out due diligence to limit risk. This means researching the properties (which are usually publicized in a local newspaper or on the tax department’s web site a few weeks before the sale), understanding your potential obligations, knowing what the rules are, speaking with local brokers and attorneys, and realizing that while you may do well in the best circumstances, the “best circumstances” may be rare.

Most impacted property owners (about 95 to 98 percent) actually pay the taxes. So most folks who invest in these certificates are doing so for the interest paid on their money.

For those interested, research the process, visit an auction first to watch how it’s done, know the rules, and then decide if this is an investment for you.

Housing markets are turning around all across the country. The way this is measured is first through pending sales and then the following closed sales. By the time the national numbers turned, the recovery had already been happening for months.

Albuquerque is one such city. Prices are still down from last year, but they are now leveling out at around $180,000 (for about 8 months now). The pendings have been increasing for months and now the closed sales are following suit. The same is true for cities such as Las Vegas, Washington DC, Miami, and others.

Are you taking advantage of this advantage as a sales person? Are you getting the word out to your local sphere about what’s happening in the local market place?

The recovery has happened, predictably, in two fashions in the favor of buyers.

1 – While prices dipped, buyers could have named their price and received thousands of dollars back from the seller to buy their home.

We had a phrase of — “what would be the price you just couldn’t walk away from” on this house. The buyer would look it over and say — “Well — if it was $25,000 less, I would buy it.” So that’s what we’d offer – and that’s what they would get. While the market continued it’s slide, buyers got ahead of the drop and “stole” houses all over the country. To the shagrin of banks and owners, the buyers pulled in discounts in the hundreds of thousands. The agents who knew how to forecast that drop, helped buyers save a ton of money and made good incomes through the process.

2 – The cost of money kept dropping and then Uncle Sam started throwing in money to boost morale and buyer interest.

In the home-purchase process, buyers have to buy two huge commodities — the house – of course, everyone knows that. They keep waiting for the price to drop to the bottom and THEN jump in and buy. But you have to also look at that second product – the money.

The cost of money is measured in the interest rate and the points paid for such interest rates. This year, buyers have picked up money for interest rates as low as 4% – those are rates that my grandparents never saw!

So we have low prices and low interest rates. Did you pick up on that as the sales pro? More importantly – did you get your buyers on board and off the fence?

If you wanted to have predicted the come-back, then a look at sales on a state-by-state level would have been a good place to start. The media looks only at price. A very foolish move. A recovery begins when the buyers return – much sooner than when prices start upward.

On this table from Realtor.org you can see that the hardest hit states (California, Nevada, Arizona, Florida, Virginia) have now had the best quarters (up 100%+ in some markets).

Yea – we hit the bottom alright. Get ready for the bounce.

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