2008 Five Star distinction AND Small Business Owner

What a year this has been.  So much has happened this year; some of it great and some of it a bit more hair-raising.  I can’t say 2008 was boring.

 

 On a personal level this is ending as an incredible year for me.  It has been such a fun year working with all of you.  And I was really honored to have been voted 2008 FIVE STAR: Best In Client Satisfaction^SM    I can’t tell you how surprised and touched I was to find out that my clients had voted me for this distinction.  For those of you who did; thank you so much! 

 Another really exciting event is my purchase of Quorum.  It has been my goal to be in business for myself for quite some time and that goal has just been realized.  My husband and I have purchased the Quorum office.  The new corporation name will be Quorum – Laurelhurst, Inc.    I am so grateful to be buying a business that has such a great legacy and great real estate agents.  I am really looking forward to building upon that legacy and working with all the agents to take the Quorum office to the next level.

I am excited about the possibilities and adventures that are headed our way for 2009.   

Thank you again for everything and have a wonderful Holiday and Happy New Year

       http://video.fivestarprofessional.com/seare2008/jennflynn

Paper Issues…and the importance of Recording

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So I am writing this for all of you with paper issues.  Those who shred/discard all their papers in the hopes that you will think before shredding. Right now we are dealing with an issue where a customer is having two real estate transactions fail because of a missing pay off statement on a HELOC.  She has put her house on sale & put an offer on another home with a contingency of her first home selling.  She has an offer she’s accepted on her first home, but everything is falling apart because back in 2001 she took out a HELOC on her house.  A couple of years later she took out another HELOC from another institution which paid off the first HELOC.  However, now that she needs to sell, there is still a lien of 25,000 against her property and she can’t prove it’s been paid already without the pay off statement.  The institution that gave the first loan said that they don’t save anything longer than a year, so they can’t help her out & the second institution that paid off the first is not producing anything to say that they paid it off either.As a person who has been through a tax audit, I can testify how important it is to keep your documents, but this is yet another great example.  It also brings up another point.YOU SHOULD ALWAYS RECORD A PAYOFF OF A LIEN WITH YOUR COUNTY RECORDS OFFICE.  http://www.metrokc.gov/recelec/records/When a lending institution gives you a loan against your home, they record that loan against your property.  This is done for 2 reasons.  It provides public record of their lien against your home & it gives them a place holder for collecting the loan should you default.  But I am not aware of any law that requires them to record when that lien is paid off.   Got to love how they make sure it’s done when it’s too their advantage, but don’t when it’s not 😉 So the moral of the story is take the original payoff statement to the recording office & at a minimum, keep the original & don’t shred it!

For Sale By Owner (FSBO)

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So it seems lately I have been doing a lot of trying to educate various people on the benefits of listing with an agent versus selling the home yourself. 

It’s the same old story that I hear a lot.  A comparable is provided to a prospective seller & then they look at that value on their home & decide that they want to list it themselves so that they don’t have to pay that commission.  There are a few issues with that thought. 

The comparables is based off of other homes sold through a Real Estate Agent, so it is not a comparable of how much you could get without using an agent. 

WHY? 

1.  Because the same type of person selling a house on their own is the same type person looking for a deal.  Right off the bat they are going to look at the price of the house, do the research online & know what other houses are selling for that compare to yours.  Then they are going to take 6% right off that number because they know the FSBO seller isn’t using an agent.    

2.  Real Estate Agents do your marketing & bring in more buyers. That is their profession, and they have the tools to market your property.  A for sale sign & ad just can’t compete.  And more buyers means the seller is more likely to get multiple offers and higher prices.

3.  Just because a FSBO seller lists it their home does not mean they will get away commission free.  If the buyer has a real estate agent representing them, the seller will end up paying at least the 3% commission to that agent, and then the seller is actually putting theirselves up against a professional who negotiates for a living with the sole purpose of getting the best deal for their client.

These are just a few of the top reasons why.  I found a blog that does a fabulous job of describing in more detail the cost of selling without an agent.  http://activerain.com/blogsview/104943/For-Sale-By-Owner

But the bottom line is that FSBO transactions make less.  In 2005 the average was 16% less than a seller who uses a real estate agent  and in 2006 it was 32% less (Source is National Association of REALTORS).    And that translates into loss of money and a hassle.   http://www.realtor.org/Research.nsf/pages/FSBOFacts?OpenDocument

What does a good traditional Real Estate agent do for you?

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With all the talk about the 60 minute show that a lot of agents feel was mainly a promo for Redfin; I decided I would come up with a list of all the things a traditional agent does for either a buyer or a seller. 

In addition to the following list I also bring a few other things to the table

1. I have basic staging abilities
2. Can give advise on curb appeal with my landscaping background
3. Can give advice on remodeling ideas to make it your own or prepare for a sale.

Good Traditional Real Estate Agent Services

1. Meet with you in person & develop a personal relationship with you
2. Provide you with information
3. Help you set your priorities.  Needs vs. wants and accurately and quickly determine what you are looking for using various methods
4. Know the neighborhood, pros & cons etc
5. Preview properties before showing to you so that your time is not wasted (pictures can be deceiving)
6. Negotiate for you
7. Provide suggestions on how to get your house to sell
8. Provide you with comparables and an valuation of your home
9. Write an offer
10. Present the offer
11. Advising you on follow-up to counteroffer
12. Fill out the purchase & sale agreement
13. Making sure the appropriate paper work is filled out during the entire process
14. Help with coordinating or facilitating the appraisal and inspection
15. Attend the inspection with you, talking through the negatives & positive
16. Assist with explaining different methods of paying for a home
17. Explain what is required in order to be competitive with other buyers
18. Communicate with the lender, check status’s, loan docs etc
19. Communicate with any of the players such as Sellers, Listing Agents, Escrow, Title co, Lawyers, Builders, and Clients
20. Make sure all deadlines are being met
21. Run interference when an issue comes up with the transaction
22. Help with Escrow
23. Help coordinate key exchange
24. Have a professional network
25. Provide peace of mind throughout the transaction
26. Be your advocate and buffer for your transaction
27. Continue to be a resource long after the transaction closes

Capital Gains Taxes

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I had a couple of friends who had been in their houses less than 2 years & were conteplating moving.  Both of them were concerned about Capital Gains Tax, so I did a little research for them.

In VERY SIMPLE terms capital gains tax works like this. 

You pay capitals gains on real estate when you sell a property except for in the following situations.

You have lived in the house for 24 months of the previous 5 years & your gain on the house is less than 250,000 if you are single  or less than 500,000 if you are married.  If you are married & your gain is 600,000 when you sell the house, then you would pay capitals gains tax on 100,000 of that 600,000.

There is an exception to the 24 month minimum rule if you can prove some sort of hardship.  For instance, if you had to move 50 miles or more for work. If you had bought a condo & then got pregnant with triplets & had to buy a bigger place…those would work to make you exempt from Capital Gains tax.  You of course would want to talk to a tax specialist or someone like that to determine if you had a reason for exemption or another possible solution I’m not aware of.

If you did decide to sell anyways that Capital Gains tax is 15% of ((sum of cash + fair market value of property recieved ) – (cost of the property + cost of improvements to the home))

or stated in another way:

Cost Basis =

Purchase Price
+ Purchase Costs (money down, title & escrow fees, real estate agent commission, etc)
+ Improvements
+ Selling Costs (title & escrow fees, real estate agent commission, etc)
– depreciation (if you have ever taken depriciation on it for a home office or anything like that)

Then to calculate your profit or loss

Selling price – Cost Basis = Gain or Loss

If you end up with a Gain Then

Gain – Maximum or Partial Exclusion = Taxable Gain

The Maximum or Partial Exculsion would be the $500,000 if you had lived there 24 mo of the last 5 years and were married or if you qualify for one of the partial exclusion reasons like having to move for work

Check out this IRS document for more information and as always consult with a tax accountant first

http://www.irs.gov/pub/irs-pdf/p523.pdf 

What makes a good agent to you?

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So when we bought our last house I found that really we did all the searching & then would just call our agent to show us the house.  Any choices that the agent sent us were nothing like we wanted.  So one of the things I want to do is really listen & pay attention to what someone is looking for.  That way I don’t waste their time looking at houses that are not a fit. 

I also personally liked an agent who did not try to “sell” me on every house we saw.  I can see the bones of a house & know if it has potential.  And I hate it when something is called something it’s not.  For instance I once went & saw a house where I could hear the freeway inside the home.  I commented on the noise & the agent showing the house said “it’s kind of like haveing a stream running through the back yard”  Yeah whatever!

 So – I’m curious – what do you like out of an agent?  What do you prefer that would make you refer an agent to everyone you know?

 Jenn