10 Tips For Choosing a Real Estate Agent

Whether you are buying or selling a property, choosing a real estate agent may be the most important decision you make. Good real estate agents can save you a substantial amount of time and money. They can also ensure that the buying or selling process is an enjoyable and memorable experience. Here are some tips for choosing a real estate agent:

1. Ask Friends/Family for Referrals

Ask family and friends for their advice on local agents. This way you will be sure to find an agent with a good reputation.

2. Consider More than One Agency

There is an array of agents that will kill for your business. That is why you should interview as many agents as you can. Compare agents with regard to their knowledge of the area, experience and qualifications. Also, ask for references from previous clients.

3. Choose an Agent that Knows the Importance of Customer Care

While interviewing different agents you will be able to establish their level of customer care or how far they will go to satisfy the customer. Look at things like their attitude towards returning phone calls and their willingness to meet with you.

4. Choose an Agent that Handles Homes in Your Price Range

When you opt for an agent that deals with homes in your price range, you will be sure to end up with an agent that will give his or her best effort. Some agents deal only with high-end properties and are used to high commissions. They are more likely to attend to these properties first.

5. Choose an Agent that Respects Your Time Schedule

If you will not be able to view properties during office hours, you need to find an agent that is willing to do business after hours or over weekends.

6. Look for an Agent that You Can Communicate With

Communication is vital when buying or selling real estate. Make sure that you choose an agent that understands your needs and that communicates them well. You will be best off if you choose and agent that registers a high level of comfort with you or with whom you are compatible with.

7. Choose an Agent that Provides Multiple Services

It will be a bonus if you can find an agent that can handle the buying/selling process as well as other additional services like arranging property inspections or who can refer you to a trustworthy real estate attorney.

8. Choose an Agent That Can Negotiate

Negotiating skills is an essential quality of a good real estate agent. Make sure you choose and agent with impeccable and proven negotiating skills.

9. Choose an Agent with Lots of Resources

Ask agents where your property will be advertised. Make sure that the agency uses print advertising (newspaper/magazines) as well as other promotional material such as brochures. Also check if the agency makes use of the Internet for advertising their listings.

10. Follow Your Instinct

Choose an agent that makes you feel comfortable and whom you trust. You level of comfort and satisfaction will let you know if you’ve met the right agent.

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A SMART Approach To Real Estate

There are so many aspects, contingencies, scenarios, and differences, in real estate, it serves little sense, to seek, some, overly simplistic approach, but, rather, it makes more sense, to look at the bigger – picture, and proceed, with a SMART way/ method! Some of the considerations, should include: current economic state, as well as foreseeable future; consumer confidence; specific, personal needs; present finances; personal comfort zone; future financial possibilities; region/ area/ neighborhood, etc. With that in mind, this article will attempt to, briefly, consider, review, examine, and discuss, using the mnemonic approach, why this matters, and why, it is the wisest, possible approach.

1. Systems; sustainable; strengths; solutions; sense: When considering houses. it is wise, to avoid, simply, following, any emotional first – look, but, taking the time, and making the effort, to consider, all the specific house’s systems, and see, which might best serve your needs, etc! Consider, what you believe, the foreseeable future, may, offer, and select a sustainable place! Know, identify, and consider, every property’s strengths, as well as weaknesses, and determine, which one, makes the most sense, in the longer – run, and has the finest solutions, for your personal needs, etc.

2. Money; motivating; meaningful: Begin, by giving yourself, a check – up. from the neck – up, and in an introspective, objective manner, and knowing, if you can afford the up – front money, as well as the future financial responsibilities of home ownership! Your home must be personally, motivating, because, for most of us, the financial value of a house, represents our single – biggest, financial asset. Make the finest, most meaningful, personal, well – considered, decision!

3. Attitude; attention; aptitude; actions: Focus on why, and how, you can, instead of cannot! Proceed with a true, positive, can – do, attitude, and pay keen attention, the your options, etc. Learn as much, as possible, so you are prepared, and develop, the most relevant, skill – set, and aptitude. Proceed with taking personal charge of your life, and take the actions, needed and necessary!

4. Relevant; responsibility/ responsible/ responsive; realistic: Know your individual needs, and requires, and consider, your quest, in relevant terms! Take the personal responsibility, to take responsible measures, which are responsive to your present and future needs, in a realistic manner!

5. Trends; time – tested; timely; trust: Trust your little – voice, and know, which trends, are best fitted, to you! Learn the time – tested, industry – related, information, and avoid procrastinating, proceeding in a timely manner!

Be your best friend, and use a SMART approach to real estate. Are you prepared?

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The Real Estate Market in Hong Kong Today

Now Hong Kong is a Special Administrative Region of China its star is rising as fast as China’s and the entire real estate sector in Hong Kong is benefiting.

The physical geographic restrictions of Hong Kong mean that there is a finite supply of residential and commercial real estate available for sale and rent; and as Hong Kong further strengthens its already robust economic, trade and investment ties with China, the demand for real estate in the region is intensifying.

Competing for space are multinational companies and their massive expatriate employee base, local businesses and local residents, tourists and students. In fact the demand for residential and commercial space in Hong Kong is at its highest today since the glory days pre-1998. Having suffered an acute recession from 1998 until 2003 real estate prices are for sale at deflated costs and are therefore seen as being undervalued which means the real estate market is in a great position right now to grow and expand.

Because demand for real estate in Hong Kong is so intense…

Because Hong Kong’s economy is going from strength to strength…

Because domestic purchasing power is so strong…

And because the real estate market is believed to be currently undervalued – the wealth of opportunity for profit in Hong Kong’s property market right now is intense.

Real estate investors from around the world are buying into the projected period of growth and are committing substantial funds to the Hong Kong market. In terms of any restrictions placed on foreign investors there are none in Hong Kong…in theory anyone is permitted to purchase property. As with all city based real estate economies property in Hong Kong – though currently considered to be undervalued – cannot be regarded as ‘cheap’. However anyone who wishes to get into the market can get mortgages locally in Hong Kong to purchase and can almost guarantee the rental income they will generate if they choose to buy residential or commercial units to let.

The medium term prospects for the real estate market in Hong Kong are good with analysis showing that the number of renovation and new development projects started in recent years is below what is required for the current level of demand. This undersupply will last for at least the next four years according to expert industry analysis. This has resulted in predictions for property price growth of up to 12% annually for at least the next four years, making the real estate market in Hong Kong today a highly attractive prospect.

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Real Estate Broker Requirements: The Qualifications

The real estate broker requirements will give you an idea that shifting from one career to becoming a real estate agent is fairly easy. In fact, the qualifications do not vary much from one state to another because the demands are practically the same too. Although there might not be any particular degree required to become a good broker agent, it would not hurt if you have one because it will definitely be a good back up for whatever you are pursuing. And yet one of the most important requirements is that one needs to be able to take a series of exams to earn the license of being a broker.

Since the market of a real estate agent is huge and yet very competitive, one must be able to start with a real estate firm to work with. Usually a broker needs the help of broker and if you are just starting a career in real estate, it is best to find a broker you could work for. Then, the next thing that you need to do is to find people who are selling their properties and after that you need to search for people who want to buy that property. The more people you find, the more likely that you would be able to sell. This only means that you would have more chances of earning money.

In addition to what was already listed, becoming a broker agent is not easy but some say that it is definitely worth your time and effort. Not only will you be learning the tricks of the trade but you will also be equipped with the knowledge of the legalities that brokers have to deal with and keep up with. In fact, one of the major requirements of becoming a broker is working with technological advancements like the computer. If you do not have any knowledge about how to use it or how it works, it might be minus points for you. This type of profession demands for your diligence and perseverance because if you are determined to be the best broker, you can be one and the monetary rewards can be fulfilling too.

Perhaps by now, you have realized that the requirements are quite easy to meet and becoming a broker agent is actually within your arm’s reach. Here is a breakdown list of the requirements that you need to prepare so that you can immediately start with your broker agent career.

• Age requirement

• Pass the background check

• Completed real estate courses

• Pass the real estate state exam

• Completed application form with needed attachments

• Payment of the fees

The requirements being asked from those who wish to become broker agents are not totally difficult to gather. In fact, they have one of the simplest application systems yet it is one of the most rewarding in terms of payment. Just look through the basics of application, you might just convinced yourself that it is a good career to shift to or at least you might want to try.

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Positioning Strategies For Real Estate Agents

Just recently I was asked to do a talk for my good friend and co-author

of our best-selling book in Singapore titled Get Rich Now: 15

Strategies from a Self-made Millionaire, Dr Dennis Wee. (Dr Wee is one of

Singapore’s most celebrated entrepreneurs. Despite not having completed his

high school education, he managed to start and build up his own real

estate company, Dennis Wee Group, to become of Singapore’s leading real

estate companies generating S$3.8 billion worth of sales in 2006.)

He wanted me to share some marketing secrets with his real estate

agents and I was more than happy to do so because I believe there’s so much

more that agents can do to position, brand and market their services.

Sadly, most agents, whether in real estate or financial services

(insurance) or any other industries, tend to see themselves just as a

salesperson. This perception of themselves is limiting their growth and income!

By thinking that they are just salespeople, they don’t see the

possibilities of growing their careers into full-fledge businesses. There are

so much more benefits for someone to think big and build a big business,

compared to just existing, and making a living. Donald Trump said: “If

you’re going to be thinking, you might as well think big.” But that’s

another topic for another session.

Here, I’m going to show you some detailed examples of how an agent can

differentiate himself using some simple positioning and branding

strategies that I have used with other clients to great success.

Many people perceive that being an agent in any industry is like being

a salesperson. Someone who is always competing with all the other

thousands of salespeople in the industry. To a certain extend it is correct.

Those other agents are also looking for the same deals that you are. It

is a matter of who gets the deal first. So they are relentlessly going

out there to cold prospect.

Now, I am not a fan of cold prospecting. To me, cold prospecting is

like bashing your head against the wall, hoping it will crumble before you

start bleeding… most people just end up being very disappointed. Why do

you think new agents don’t last long? I strongly suspect it’s because

they realized that their heads can’t go against the wall.

But there are ways to turn the table around. In my talks I like to ask

the audience: Would you prefer to work hard and look for prospects, OR

would you prefer to let your prospects seek you out?

The answer is obvious.

But more than just having less work and an easier time, there are

deeper psychological advantages to being able to let your prospects seek you

out instead of you cold prospecting them. Simply said, when you seek

someone out, you will be open to the person’s ideas, advice, expertise.

That is the reason you seek him/her out in the first place–to get expert

advice.

There won’t be the wall of resistance you’ve grown accustomed to when

you cold prospect. In fact, now it’s them who are jumping over hoops to

seek you out in your domain. Man, it’s always exciting to talk about

this!

Believe me, it’s a whole new paradigm. Imagine you becoming a celebrity

overnight and people are just doing everything they can to get in touch

with you. Think of stars of reality shows like Survivor and American

Idol… It is that powerful!

So how can you achieve that?

Let’s look at a typical scenario:

You have probably have opened your letter box day after day only to

find it stuffed with piles of flyers from various real estate agents. Just

take a closer look. You will realize that all of them claim to be the

“specialist” in the area. Now if everyone is a specialist, then does it

matter who you call? Absolutely NOT!

“But I’m different from the rest. I have more experience, quality,

etc…” you protest.

Let me be upfront. It doesn’t matter who you are or what your

background is. If the prospects don’t recognize that straight away, you are just

like everybody else. No matter how different you think you really are.

Repeat after me: If you are like every-body else, you are a no-body.

Remember: It’s all about their perception, not yours.

So instead of being just another area specialist, be different. So far

I’ve not come across any agent who positions him/herself as the

specialist to serve “first-time home buyers”. Do you think that is powerful?

Absolutely!

First-time home buyers are inexperienced. They don’t know what to

expect, what the whole buying process is going to be like, how long will it

take, what possible hiccups might occur, etc. They are in a place where

they don’t know what they don’t know. Do you think they have different

needs/concerns compared to those who have bought a house before? Of

course! If you are able to gain their trust, do you think they will look

for someone else?

The point is this: you have the information that first-time buyers are

looking for (in fact all real estate agents should know these

information). But by letting them know that you are the expert who can guide

them through the whole process safely, will in itself, earn you a closed

deal.

You might need to make some minor changes in the way you do things,

such as explaining the buying process more thoroughly, going through the

nitty gritty details that you won’t normally need to with experienced

buyers, etc. But all these will help to cement your positioning and

branding as the expert to serve first-time buyers. And once your branding

gets out, you will be busy with so many referrals for other first-time

buyers. Is the first-time buyers market huge enough for you?

Once you have established your branding, it is easy to market your

services. You can easily get the publicity that once used to be impossible

for you. If the media wants to get an opinion on what first-time buyers

think about a new housing policy, who do they look for? They will

interview the expert (you). And after appearing in the media, you will have

gained even more credibility. Can you see how this will snowball into

your profits?

It all starts with creating a powerful positioning, branding and

marketing strategy that is suitable for you.

What other positioning can differentiate you? How about:

o The property investments expert (investors love to work with those

who understand their investing needs, someone who is not just another

agent); or

o Divorce cases specialist (they definitely have different needs as

compared to the usual buyers); or

o Downgraders or upgraders; or

o Serve only those looking for luxurious, high-end houses worth $XX

amount and above (your service must of course reflect that); and

o Many more!

As you can see, it is critical to create a powerful positioning to get

your prospects to start looking specifically for you. I assure you I’m

not an expert of the real estate industry. But I’m an expert in

positioning, branding and marketing. These same principles can be applied in

other industries, such as the financial services industry, perfectly

well.

So start positioning yourself today!

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Claude Muller Real Estate Megalomania: What Happens When the Sharks Are Above the Law

While reading an article on Alexis Muller Pellerin, described as a rising star of the real estate world, I have also discovered his grandfather, Claude Muller, retired property developer in Cannes. I managed to find the book published by Hélène Constanty in 2015 “Razzia sur la Riviera” (Raid on the French Riviera). When you mention the real estate industry on the Côte d’Azur, you immediately think of collusion with local elected officials, bribes, corruption, yachts and stories of suitcases filled with bills. In this book, the description of this universe is worse than you could ever imagine!

There are several definitions for offenders. Offenders who flout the law in need of money, assets, etc., and offenders who flout the law for more and more profit. The wealthiest sitting on their fortune, searching by all means – lawful or not, to accumulate more and more. Petty crimes which directly result from megalomaniac desires of men in their wild silk three-piece suits. The golden organized crime of various businesses, sharing a common practice: tax evasion.

The case of Claude Muller ideally depicts the profiles of the ravenous meat-heating shark. Indeed, tax evasion and property fraud punctuated the career path of this real estate star.

Commissions paid on accounts in Switzerland and Lichtenstein

As a real estate developer and broker, Claude Muller prospered in the 1980s. He got along with local public figures and maintained influential relations in Cannes and Antibes. He was known for his imposing bearing, had the gift of the gab and maintained an exceptional network. Three useful qualities that enabled him to attract wealthy customers, especially from the Gulf. Claude Muller was a repatriated “pied-noir” from Algeria, fluent in Arabic.

While conducting businesses with his wealthy clients, he took the opportunity to initiate a tax evasion scheme. This scheme was tried and tested but efficient. Claude Muller implemented an invoicing system to the benefit of the Arabic princes he worked for – the main part of his customers, while collecting a real fortune for his services. His fraud system was the following: he worked with a Geneva attorney Baudouin Dunand, who founded customized real estate companies (SCI) in order to receive money of the financial transactions of the sold villas. These SCI were always established in countries known for applying confidentiality policies in terms of client identity, such as Lichtenstein and Switzerland. The wealthy investors transferred the funds on the SCI founded by attorney Baudouin Dunand, and once all providers and suppliers, who had worked on the construction site, were paid, Dunand transferred the remaining sums on a bank account held by Claude Muller. Then, the sums received by the real estate developer were enormous. Thanks to the SCI which served as a support structure for transferring money of each real estate transaction, Muller accumulated a real fortune. As for the Geneva attorney who assisted Claude Muller in these tax frauds, he is known to be the administrator of a number of offshore companies – essential parts of a broader tax evasion scheme.

Incarcerated in Grasse for fraud

In addition to the tax fraud, Claude Muller was also linked to other swindles such as town planning, privileges and real estate frauds, while being clever enough not to face the legal consequences. In 1982, he bought the sumptuous property called “Le Grand Jardin” on the island of Sainte-Marguerite. Spread on two hectares and composed of two 17th century mansions, it is the only private property of the island. With a very skillful trick, the property was exempt of the French fortune tax; Claude Miller claimed it had been bought for professional purpose. Indeed, indicted by the civil, criminal and administrative courts, he explained he bought the property for his business of real estate broker, with the intention to resell it. And during the 25 years he owned the property, the mansion was indeed for sale, but at price three times higher than its actual value. A clear message for potential buyers: “Move along, there is nothing to see here.”

Claude Muller was also involved in several fraud and swindles in Cannes and Antibes. The real estate developer did not always manage to flee from justice.

Indeed, on December 8, 1992, he was indicted for alleged forgery and fraud. Once again with his partner in crime Baudouin Dunand, he swindled the head of the government of Qatar of 13 million francs on the construction price of his property. Claude Muller was incarcerated at the Grasse jail, where he stayed three months before being freed with judicial review.

My research led to the undesirable Russian businessman Arcadi Gaydamak, involved in arms trafficking of the Angolagate and Clearstream cases, and subpoenaed in fraud cases linked to Claude Muller.

The passion of real estate seems to be handed over to the next generation of the Muller Family because Alexis Muller Pellerin, Claude Muller’s grandson, has also become a real estate developer. The young man aspires to big projects and especially when it comes to investment. We hope the name of this future major player of the real estate market will not be linked to sordid stories of money and tax evasion, and hope greed will not corrupt his intentions, as it used to be with his grandfather.

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Real Estate Law 101

Real Estate 101: The Statute of Frauds is a really old law that originated in England in 1677. It requires that certain transactions must be in writing, signed by the party to be charged, basically the person being sued. Real estate purchases are one of the transactions covered by the statute of frauds. In real estate transactions, the SOF further requires that the writing contain a description of the property, a description of the parties, the price, and any agreed to conditions of price or payment.

There are a few exceptions to this rule. Part Performance is when someone has paid all or part of the purchase price, taken possession, and/or made substantial improvements to the land. For example, if Bob made an oral contract with Sue to buy property, paid her a down payment of 25% of the agreed purchase price, and built a house on the land, then even though the SOF would invalidate the oral contract, Sue could argue that Bob’s partial performance proves the existence of the contract.

In addition to Part Performance, Equitable estoppel and Promissory estoppel may be used to prove an oral contract for the sale of land. Equitable estoppel is based upon an act or a representation. Promissory estoppel is based upon a promise.

Once a contract has been signed, a purchaser becomes an equitable owner of title at the time of the execution of a binding contract. Under the common law, the risk of loss is on the buyer after signing the contract for sale. In other words, if the house burns down between the signing of the contract and the closing, the risk is on the buyer. The buyer will still have to close the deal.

There are some states that have a different rule. States that have enacted the Uniform Vendor and Purchase Risk Act hold that the risk of loss is placed on the seller unless legal title or possession of the property has passed. There are a minority of states have passed this statute. So, in a majority of states, the risk of loss is on the buyer.

Surprisingly, its quite common for people to make oral contracts to sell parts of their property, not realizing it must be in writing. Later, when the buyer fails to pay, the seller is at a loss at how to proceed. An attorney familiar with the nuances of real estate law can help with this.

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Is WordPress the Best Platform for Your Real Estate Website?

WordPress has become a popular choice for the development of real estate websites. However, is it the best content management system (CMS) for your real estate website? We’ll examine why it may not be the best choice for website owners.

Why Real Estate Website Designers Are Using WordPress

With WordPress being an open source and free platform, it has become the popular choice for website providers and developers. Whether you are building a community website or a store with shopping cart, the availability of third-party themes and plugins allows you to achieve just about anything you would want.

WordPress gives website developers a great starting point and tools to build a website. Back in the early years of our company, our website developers developed websites from scratch with the code using NotePad. WordPress now allows people to build websites even if they have no knowledge of coding. In fact, many who know how to build websites using WordPress now call themselves “website developers” even though they have no knowledge of the actual website coding.

Doing It Yourself – The WordPress Learning Curve

If you have little or no knowledge of website development, the WordPress learning curve will be steep. Hosting and installing WordPress can be an intimidating and daunting task. Even with the availability of installation guides, the installation of just WordPress itself can be a nightmare if you have no knowledge of the hosting lingo. When you do get WordPress installed, you have a generic website that requires the installation of third-party themes and plugins. This is where we see most users just throw in the towel and contact us. They have a project they wished they never started, and the time they’ve spent trying to launch their website could have been spent towards growing their business and getting more clients.

Having Somebody Build Your WordPress Real Estate Website

Even if you have somebody build your website for you using WordPress, we still see many users coming to us for help. They still feel their website content is hard to manage and the change of their design nearly impossible. The main reason is that since WordPress was designed for everybody of all industries, there is so much in the backend that it becomes overwhelming. Most website owners only require a small percentage of the features available in WordPress.

Design

WordPress can build beautiful and attractive real estate websites with many real estate themes available to install. Themes give you a great starting point, but they still require customization to achieve the website you really want. A WordPress theme comes generic, requiring quite a bit of customization to personalize it for your business. From our experience, a WordPress theme will only get you about 50% of where you actually want to be with your website. The other 50% requires stripping the loaded theme to only the things you want, adding your own relevant content and images, installation of plugins, and design customization.

WordPress Vulnerability

With the popularity of WordPress comes many struggles for real estate website owners. One such major and vital struggle is website security. Once a hacker finds one vulnerability in WordPress, all WordPress websites become open to an attack. In November 2014, a vulnerability was discovered that left almost 86 percent of the 75 million WordPress websites open to an attack. Just a month earlier, 800,000 banking credentials were stolen from hacked WordPress websites.

If your website is built on WordPress, most likely it is using third-party plugins. These third-party plugins can also contain vulnerabilities making your website open to an attack. If a vulnerability is found in the plugins, you are then at the mercy of the third-party developer to fix the security issue.

Now, it is up to you if you are going to use WordPress as your platform for your business or not. It is also your choice if you will do it yourself or you will hire somebody to do it for you.

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Real Estate and the AMT: Rental Or Investment Property

The Alternative Minimum Tax is a very important consideration for taxpayers who own real estate because just about every tax rule applying to real estate is different for the AMT than it is for the Regular Tax. This article on Real Estate and the AMT will address those situations where the individual holds the real estate as an investment, typically as rental property. The differences in tax treatment between the Regular Tax and the AMT can be significant.

Interest expense

Interest paid on the mortgage taken out to acquire the property is fully deductible, both for the Regular Tax and the Alternative Minimum Tax. Unlike itemized deductions that allow a tax benefit for what amounts to personal expenses, the tax law generally allows all deductions a taxpayer has to make in the pursuit of business income. Thus, the limitations discussed in the previous article on home mortgage interest do not apply.

If, however, the equity in the rental property is used as security for an additional loan – a second mortgage, for example – then the taxpayer must look to how the proceeds of that loan are used to determine interest deductibility. If the proceeds are used for a car loan or to finance a child’s education, for example, then the interest is nondeductible personal interest. If the proceeds are used to improve the rental property, the interest is deductible.

Suggestion – it is best that taxpayers keep personal borrowings separate from business borrowings. Mixing the two creates recordkeeping challenges and can result in disputes with the IRS.

Property taxes

Property taxes paid on rental or investment property are allowed in full both for Regular Tax purposes as well as for the Alternative Minimum Tax.

Planning idea – if you have an opportunity to pay your property tax bill either this year or next, pay it in a year when you have enough income from the property so as not to generate a rental loss. This strategy can help avoid triggering the passive activity loss limitations described below.

Example – in Florida property tax bills are mailed in October, and are payable under the following discount schedule: November – 4%, December – 3%, January – 2%, February – 1%. If you have a loss from the property in 2010 but expect to generate income in 2011, do not pay your bill in November or December – forgoing that small discount could help you avoid the loss-limitation rules.

Depreciation

Depreciation is allowed for property held for investment. The portion of the cost allocable to land is not depreciable, but for the building itself and the furniture, appliances, carpeting, etc. a depreciation deduction may be taken.

Real property (this is the legal definition of the house or other building) held for rental/investment may only be depreciated for Regular Tax purposes under the “straight-line” method, over a useful life of 27.5 years. Thus, a property with $275,000 allocated to the building would be depreciated at the rate of $10,000 per year.

Personal property (this is the legal definition of things such as furniture, appliances, carpeting and the like) may be depreciated for Regular Tax purposes under an “accelerated” method over a useful life of five years. An accelerated method allows a larger depreciation deduction in the early years, in recognition of an obsolescence or decline-in-value factor that you see in new property (cars are a good example).

For purposes of the AMT, however, personal property may be depreciated only by using a straight-line method. Thus, an AMT item will be generated in the early years if the accelerated method is used.

Planning idea – for personal property consider electing the straight-line method for Regular Tax purposes. While giving up a little tax benefit from the greater depreciation in the early years, it could mean avoiding paying the AMT.

Active/passive investment rules and the “at-risk” rules

A taxpayer who is not “active” in managing investment property may not use losses from rental property to offset other income such as salaries and wages, dividends, interest, capital gains, etc. Instead, these losses are deferred until the taxpayer either sells the property or generates passive income from this or other passive investment sources.

The at-risk rules similarly deny using these types of losses to the extent the taxpayer has acquired the investment with borrowed money and does not have personal liability on the debt.

Planning idea

If these loss limitations apply, consider the planning ideas mentioned above to minimize the losses being generated each year. They are not doing you any good anyway.

Sale of the property

Several different AMT issues can arise on the sale of rental/investment property. One is that your gain or loss may be different for the AMT than it is for Regular Tax purposes. This would be caused if different depreciation methods were used. For example, if the personal property was depreciated using an accelerated method for Regular Tax purposes, then the basis in that property when calculating gain or loss on sale would be different because the straight-line method had to be used for Alternative Minimum Tax purposes.

Gain on the sale of investment property generally is capital gain, although a portion may be treated as ordinary income depending on the accelerated depreciation method was used. Capital gains in and of themselves are not an AMT item, but nonetheless they can result in AMT being paid. This is because the AMT exemption amount is phased out for taxpayers at certain income levels, so this additional income can have the result of reducing the exemption which in turn increases taxable income for purposes of the Alternative Minimum Tax.

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Quickly Selling Real Estate by Owner When Fast Cash Is Necessary

The good ole’ days were refreshing. You could put up a sign in your yard and get fast responses from interested potential buyers, or hire a listing agent and not worry about their commissions eating up your cash. Times have changed.

Real estate has become competitive. In some areas, it’s a sellers market. In others, buyer’s take the reins. No matter what though, there are many thousands more individuals in real estate now than there were back then. With investment seminars and flipping shows becoming more mainstream, the real estate pool is growing bigger on a daily basis.

But what if you are in a hurry to sell? Does that mean you are motivated? Let’s take a look at what constitutes a motivated seller, and whether or not some of these seller techniques will work for your situation…

Motivations:

  • You are facing foreclosure

Times can be tough. You may have been let go from that job and couldn’t replace the income in time. The bank sent you a letter giving you notice of a Lis Pendens (the beginning of a foreclosure, also known as a preforeclosure) You are out of options, and you don’t want the foreclosure to end up destroying your credit.

  • You are behind on taxes

Just as before, this is an immediate situation that can destroy your credit. Taxes will get collected no matter what, so bad credit doesn’t need to be added to the mix. Back-taxes will not only eat up your equity, but will also be attached to your future wages.

  • You have bad tenants

You are constantly receiving complaints about the tenants in one of your properties. Police are becoming a normal sight in front of the property. Perhaps the renters are turning your intended investment into a drug house. You don’t want to deal with the situation and would rather take cash out of the investment and walk away.

  • You are getting divorced

Let’s face it. Not many are fair in divorce proceedings. Who is keeping the house? Neither of you? So you have no choice but to sell quickly so you can avoid your soon to be ex like the plague, and get some cash for a fresh start.

  • You are retiring

Whether you are a landlord who is retiring from the business, or a couple with a home that you’ve had for years, you just want some cash for your equity so you can move to warmer climates and bingo.

  • You inherited real estate

You just inherited a house or multi unit property, but would rather have cash instead. You want a quick sale, and don’t want to be bothered with upkeep.

  • You are an out of state owner

You thought you could manage the investment property in California while relaxing in your home in Maine. Unfortunately, good help is hard to find and the property managers all turn out to be drunks. The grass is high and you are getting letters. It’s causing more headaches than it’s worth.

  • You just want some extra cash

You don’t have a need for the property in question and you simply want to pad your bank account.

These are all valid reasons that would make you a motivated seller. The only question I have for you in this case is… are you greedy?

A number one killer of real estate sales is an owner who has too much pride to accept that the market will not support their outlandish property valuations. The fair market value may be high, but nobody is biting. How is that quick sale going for you? The first step in selling your home quickly is acknowledging that you need to be open minded. If you can be open minded about the price of the sale, or the terms, then selling fast will be a breeze.

Where are my target buyers?

You have quite a few options. Some will take longer than others. Probably the number one way of selling quickly is seeking out a wholesaler. A wholesaler is a real estate investor who looks for discounted properties, writes an offer, then assigns the contract to one of their many cash buyers. Often, the wholesaler will have hundreds, or even thousands of investors in their contact list who are ready to buy immediately. Their investment partners have been qualified by the wholesaler with proof of funds, and will have shown the wholesaler multiple deals that they have closed in the past.

There are wholesalers that buy properties in multiple states, while other wholesalers are limited to a single state. Some of them even stick to a specific city or regional area. They are known for the use of phrases such as “we buy houses, any area, any condition”. While many wholesalers stick to deeply discounted properties, others work with low equity deals where Subject2 and seller financing can be put into play. These are some of the techniques that require you to be an open-minded seller that is truly “motivated”.

Another option for a quick sale is Craigslist and other classified websites. If you are going the classifieds route, you have to be prepared for the ‘tire kicker’ responses. There can be a lot of newbie investors, and people who are just looking that will take a lot of your time to screen out before finding a true buyer. When listing a classified ad for your home, make sure you include as many details as possible in the ad. Leaving out bedrooms, bathrooms, parking, and other features will only mean that you have to spend time discussing these things when taking the multitude of calls you will receive.

If classifieds are not your thing, you will want to find buyers through a more direct route. Go to where they hang out. There are forums such as EquityPaper, and BiggerPockets that have premium subscription options for real estate listings and other networking tools. These are forums where investors get together to discuss real estate topics daily. If you list your home in these professional member areas, or marketplaces, you can get fairly quick responses from interested buyers.

Determining property value to an investor

When listing your property, there are some things that potential buyers will want to know in addition to the standard property details. ARV (after repair value) is one of them. To find your ARV, go to Zillow, Trulia, and Redfin. On each of those websites, search for your property and write down the estimated value for each of them. Add all 3 of those values, then divide the sum by 3. The result will be your ARV.

After you have your ARV, you want to determine what the new buyer will have to put into the property in repairs. If your home is in great condition, you only need to account for simple things such as paint, appliances, and other things related to the buyer’s tastes. You would multiply your square footage by $10 to get the total credit the buyer will want. If the property needs some updates such as flooring, new toilet, etc, then you will multiple the SF by $15. Broken windows, doors, etc will be $20. If the house is a disaster and a complete rehab, then the multiplier is $30. Now subtract that number from the ARV.

Whether or not the buyer is a wholesaler or a flipper, they need to make something off of the deal. This can be anywhere from $2,000 to $50,000 or more depending on the location, value, and other factors for your property. Many good wholesalers will stick to the $10,000 pricepoint or close to it however. So take your new ARV and subtract the buyer profit for an expectation on how much money you will be offered for the property.

Creative financing for a fast sale

Assuming that the final number from the calculations listed above was not even close to taking care of what you owe on the property, then you need to learn to be creative. Some wholesalers and flippers will still take on a property with little to no equity.

Subject 2 Financing

Subject 2 is a technique that allows the new buyers to take over your mortgage payments, and assume control over the property. Sub2 investors are looking for leverage so that they do not tie up their credit, but can obtain a rental property at the same time.

A seller may have a concern when dealing with a sub2 deal. For example, what if the buyer does not pay the mortgage and it ends up as a bad credit item for the seller? Well, there are protections that are in place for sellers during subject 2 existing financing deals.

  • A single late payment can be a deal breaker. It can be made so that in this event, the buyer is in default and they lose the property back to the seller. This single possibility is reason #1 for it being a rare scenario. Most subject 2 investors are seasoned. They have been doing it for years, and have made millions through rentals with such deals.
  • Limitation clauses such as one requiring the buyer to refinance the property in their own name within a set time period reduces the risk even further. Let’s say that in 2 years time, the buyer is required to refi. By then, they will have accumulated enough equity by paying down your loan for this to be a possibility through traditional lending methods. Even in the worse case, they can secure hard money after that time in order to leverage additional time to flip the property or get other financing.

Contract for deed, or lease option

If you aren’t in a complete hurry for a bunch of cash, you can sell on a contract for deed, or a lease option. This will ensure that the buyer is responsible for upkeep, insurance, taxes, and everything else, while giving you a monthly income stream with little risk. With either technique, you are getting a fast sale. The best part is that you retain the deed to the home until the buyer’s obligations are met. If they default, you can simply evict them and start over again with a new buyer. The best part is that you are earning interest with your equity at a rate you agreed on in the sale.

FSBO (for sale by owner) doesn’t have to be hard. It can be quite lucritive, and amazingly fast when you learn to be open-minded and creative.

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