DRE Weighs In on “Coming Soon” Advertising: “Be Sure to Maintain Fiduciary Responsibility for Your Client or Face Civil and Regulatory Liability”
The Department of Real Estate has included in its 2018 Winter Real Estate Bulletin an article which discusses the risks of “Coming Soon” marketing. It includes a statement of the DRE’s view of “best practices” for listing agents including:
• Market the property via multiple listing services or other broad advertising means.
• Make sure the seller agrees to and understands how the property will be marketed.
• If using a “Coming Soon” strategy, do not accept and act on offers until a property has been broadly marketed.
• If the property will not be fully marketed, obtain prior written permission from the seller that demonstrates they understand that such a “Coming Soon” strategy may not result in receiving the best sales price.
• Avoid double-ending a property that is not fully marketed—it is best to refer potential buyers to another agent.
The DRE notes that “a listing agent who encourages the use of a “Coming Soon” program, without broadly advertising a property via a multiple listing service or other means, especially exposes himself/herself to the potential for an increased chance of civil liability and regulatory action when the agent also then represents the buyer in a dual agent capacity. Such a dual agent would need to be able to demonstrate that the agent acted in the best interests of the seller to obtain a purchase price that was as high as could be expected for a fully marketed property. This agent, who receives commissions on both ends of the transaction, could face scrutiny questioning whether they worked to obtain the best offer possible for the seller or was acting in such a capacity for personal financial gain.”
For an agent who takes a listing and markets the property as “coming soon” the C.A.R. Residential Listing Agreement explains the benefits to the seller of using the MLS and the impact of opting out. For the seller to instruct the agent to opt out of the MLS, the seller and broker must initial paragraph 5 of the RLA. Additionally, the seller must sign form SELM (Seller Instruction to Exclude Listing from Multiple Listing Service) or the comparable form provided by the MLS.
‘Broker-Associate’ Notifications Can Now be Done Online
AB 2330, which became effective Jan. 1, 2018, requires that whenever a broker acting as a salesperson (i.e., a broker-associate) enters the employ of another real estate broker or corporation, the responsible broker shall immediately notify the Department of Real Estate (DRE) commissioner of this arrangement in writing. It also requires that whenever the employment of a broker-associate is terminated, the responsible broker shall immediately notify the commissioner in writing.
DRE recently added “Broker-Associate” notifications to the list of licensing transactions that can be performed using the eLicensing system. A broker-associate may use eLicensing to affiliate his or her broker’s license with one or more responsible brokers. The effective date of the affiliation is the date the new responsible broker certifies the affiliation through eLicensing.
The broker-associate will be required to enter the new responsible broker’s license identification number as part of the eLicensing transaction. If the responsible broker’s email address is on file with DRE, an email will be automatically forwarded from eLicensing to the responsible broker advising him or her of the pending affiliation and the need to complete the transaction through the affiliation certification process.
The new responsible broker will need to certify, through the eLicensing system, the new affiliation before it can become effective. Once the responsible broker has certified the broker-associates affiliation and, if a broker-associate email address has been provided to eLicensing, an email will be sent to the broker-associate advising that the transaction is completed.
The real estate law does not limit the number of responsible brokers for which a broker-associate can affiliate; however, an affiliation/employment agreement signed by the responsible broker and the broker-associate may prohibit such activity. Although affiliations between broker-associates and responsible brokers appear on online public license records, this information will not appear on individual license certificates.
Should you have any questions about this online process, call the DRE’s Licensing section at (877) 373-4542.
DRE Real Estate Bulletin, Winter 2018, page 10. (Source)
New Interactive Residential Purchase Agreement for Consumers
The new Interactive Residential Purchase Agreement for Consumers is designed to provide simple yet clear explanations for the various paragraphs in the RPA. It’s not a legal analysis but instead an introduction into the purpose and meaning of the RPA’s different provisions.
Your client does not have to read through the whole thing, but can click on the corresponding finger icon to go directly to the description of paragraph one wants to learn more about. Within a particular slide, if your client clicks on highlighted text, the program will direct the user to another slide for an explanation of the referred-to paragraph.
While this program was created for buyers and sellers, REALTORS® can use it too!
IRS Expands Qualified Business Income Deduction for Real Estate Professionals and Clarifies QBI Deduction for Rental Property Owners
The National Association of REALTORS® is calling a recent ruling from the U.S. Treasury Department and the Internal Revenue Service on the new 20 percent deduction on qualified business income a “significant victory” for real estate professionals. Effective February 8, 2019, the department and IRS finalized regulations regarding the qualified business income rule, providing greater clarity heading into the 2018 tax filing season.
The final guidelines allow real estate professionals to benefit from Section 199A 20 percent passthrough deduction.
A critical component of the 2017 Tax Cuts and Jobs Act was to reduce the corporate tax rate, lowering it from 35 to 21 percent. However, nine out of 10 American businesses are structured as pass-through entities rather than corporations. As such, the Section 199A provision now provides what NAR calls “critical tax deductions” for small businesses and self-employed independent contractors. Many real estate professionals are classified as small businesses or self-employed independent contractors for tax purposes.
NAR highlighted three major provisions within the IRS and Treasury Department’s 247-page final ruling that applies to real estate professionals:
• The regulation clarifies that all real estate agents and brokers who are not employees but operate as sole proprietors or owners of partnerships, S corporations, or limited liability companies are eligible for the new deduction. The new deduction can be up to 20 percent. This also includes those whose income exceeds the threshold of $157,500 for single filers and $315,000 for those filing a joint return.
• The rule simplifies the process that owners of rental real estate property must follow to claim the new deduction. The Tax Cuts and Jobs Act specifies that only income from a “trade or business” qualifies for the 20 percent deduction. But various court rulings and prior IRS guidance sparked confusion over which rental properties are investments and which could be considered a business enterprise. NAR urged the department and IRS to simplify the rule. The final regulations have since provided clarity through a safe harbor test that requires at least 250 hours per year spent on maintaining and repairing property, collecting rent, paying expenses, and conducting other typical landlord activities.
• The final rules also provide clarity on situations where a person exchanges one parcel of real estate under Section 1031 for another parcel. The previous rules denied deduction eligibility, but the department and IRS have since recognized the initial ruling was misguided and have corrected and clarified its policy in its final guidance.
NAR served as a strong advocate in gaining greater clarity within the IRS and Treasury Department’s final regulations. “The finalized ruling … represents a tremendous win for real estate professionals across the country,” says Shannon McGahn, NAR senior vice president of government affairs. “We are thrilled to see our members emerge from this process so favorably … and for ensuring consistency and clarity within these policies.”
Source: National Association of REALTORS®
February 6, 2019
More seniors are opting to age in place rather than relocate later in life, and it has contributed to the supply shortage that’s hampering the housing market.
According to a study by Freddie Mac, seniors born after 1931 are staying in their homes longer than previous generations, and they are gumming up the works, leaving Millennials shut out of the market.
The study revealed that seniors held 1.6 million houses back from the market in 2018 – responsible for a significant portion of the 2.5 million shortage in housing units that has impacted the market.
According to the study, seniors born between 1931 and 1941 have prevented 1.1 million homes from hitting the market, while those born between 1942 and 1947 have held onto 300,000 homes.
Baby Boomers, born between 1948 and 1958, are still occupying 250,000 homes, but a pending wave of retirees among this generation is likely to alter this figure.
This trend toward aging in place – furthered by better health and higher education among the older generation – is likely to increase over time as technology and health care make it easier for the elderly to stay at home.
Thank you, Ian, Mayer for sharing this inspirational and inspiring info!! We can all relate to this.
RE: Don't Let Someone Else's Opinion of You Become Your Reality
Don't let someone else's opinion of you become your reality.
As told to Les Brown.
When looking a the stories of many successful people, at some point, they were all told they would not be successful. Some examples are famous, such as Oprah Winfrey being told she would never make it in television, Arnold Schwarzenegger being told he never told he would never make it as an actor, or Elvis being told he had no business singing. In Real Estate we get told no all the time. From people who don't want to sell, by people who don't want to buy, and in negotiations that do not go smoothly. But we don't let this become our reality and keep going!
Book of the Month:
7 Levels of Communication by Michael J. Maher.
This book was originally recommended to me by Chelsea Robinson of Rodeo Realty. Unlike many personal development books that give a bunch of information, and let you figure out who to put it together, this book is a story of Real Estate agent who is down on his luck and how he turns it around. Highly recommend!
If I can assist you or your clients in any way, feel free to contact me at 818-298-3405.
IM Home Inspections LLC
23371 Mulholland Dr # 201
Woodland Hills, CA 91364
Downsizing for the Next Chapter of Your Life
Photo via Pixabay
Fewer rooms to vacuum, more time to enjoy your priorities, and the opportunity to live closer to your grandchildren, the beach, or a dog park -- whatever makes you happy. What’s not to love about finding your next dream home? Finding the right place for your golden years can also feel overwhelming when you’ve got to downsize and decide what to do with a lifetime of accumulated stuff. Read on for tips on how to downsize and find the right home for this next chapter of your life.
Decide on your new what and where. You’ve worked hard and have enjoyed raising a family in your home. Now that your kids are grown, do you really need all that space? What do you want the next decade or two to look like? Whether you’re in your mid 50s or late 70s, ask yourself what you need at this stage in your life. A warmer climate? A single-story house to make your knees happier? While you may have needed four bedrooms and a basketball hoop at one time, does it make sense now? Where would you live if you could live anywhere? Have you always had a longing to live near water, or are you yearning to live near your grandchildren?
Get a feel for areas where you might like to live by researching them online. After deciding where to move, you can get a feel for the prices of homes that are the right fit for you. For example, if your heart is set on moving to Northridge, a little research will show you that homes there have sold for a median price of around $619,000.
Make a plan for all your belongings. The smaller the home you choose, the more downsizing you’ll need to do. Where do you even begin? Take it one room at a time and one object at a time, taking lots of breaks in between. Start in an area where there’s a minimal emotional attachment, like your laundry room. Base your decision by your needs. If you’re moving into a studio apartment in Manhattan, you’ll no longer need six sets of sheets. Follow a strict yes/no policy, where no “maybes” are allowed! As you sort through your belongings, force yourself to choose if the item is going with you or not. From the “no” pile, decide who you will give it to -- be it a friend, family member, or Goodwill. Another option is to sell the item on eBay or at a yard sale. If you’re not going to sell or give away the item, it goes in the trash right then and there. The feeling of freedom you’ll gain when you free yourself from clutter will be worth it. When it comes to treasures like your children’s artwork, love letters, etc., consider archiving them digitally.
Get ready for a smooth move. Hiring professional movers comes with so many benefits. They can pack your belongings and accomplish in a few days what it might take you weeks to do. Plus, your belongings are much less apt to break due to insufficient packaging. Moving is stressful enough without having to do the heavy lifting too, right? According to HomeAdvisor, the average national cost to hire movers runs from $504 to $1,400.
Be sure to prepare an “open-me-first” box for the day of your move. You’ll definitely minimize your stress if you include:
Toilet paper, a few towels, and toiletries
Bedding and pajamas so you don’t have to hunt for them on your first night
Coffee and a coffee maker
Whether you choose to live in a beach cottage on the Outer Banks or a high-rise condo in Chicago, welcome to this new chapter in your life. In a TED Talk by Laura Carstensen, director of the Stanford Center on Longevity, she shares that research shows that the happiest people on earth are older than 55. As you hit the “refresh” button on your life by identifying your needs and downsizing in order to live your priorities, you’ll be joining this trend. There may have never been a better time to reinvent yourself!
Article Written by Mr. Michael Longsdon
The Washington Post.
Real estate Buying a home? Let a real estate agent guide you to your destination.
By Susan Straight January 29, 2018
Buying a home is complicated, expensive and time-consuming. Most buyers and sellers welcome help from a real estate agent to walk them through the process, handle the paperwork and fight any battles that may arise.
“How often does a buyer go through the home-buying process? Maybe two or three times in a lifetime. How many times does a good agent go through the process? Twenty or 30 times a year. Why would anyone buy a home without an agent?” said Sara Rubida, a Long & Foster agent. Since the commission for the buyer’s agent is typically paid by the seller, “it’s penny-wise and pound-foolish for a buyer not to use an agent,” Rubida said.
But in an age of Redfin, Zestimates and online contracts, isn’t all the information you need on the Internet? Seriously, why use an agent? Time, for one thing. “While people are at work, we’re working: coordinating with lenders, title companies, insurance companies, surveyors, home inspectors, etc. Those things take an exorbitant amount of time,” said Mark Middendorf, also a Long & Foster agent. As real estate has become more complicated, the value of using an agent has grown.
“The hard part is not finding the property, it’s getting through the transaction without a major financial, emotional or procedural error,” Rubida said. “There are 101 things that can go wrong in a real estate transaction, and it’s your agent’s job to fix them,” said Middendorf. “People are so lawsuit-happy these days.
Your agent is the person who protects you through the whole transaction.” Experience and ability vary among agents. How do you find the best one for you? Talk to friends. Ask whether they would recommend their agent and why. Specific examples help you to know the agent’s strengths. Some agents love working with first-time buyers. Others connect especially well with those prioritizing good schools or military relocations.
An agent who is ideal for some people may not be best for you. Interview agents. Meet with your top choices in your home, at the real estate office or a coffee shop. Buying a home is such a personal decision that the better you and your agent know each other, the better she can help you find the exact home you want. “Sadly, some buyers’ interviews consist of basically one question: How much of a rebate will I get if I use your services? Ouch. Really bad idea,” Rubida said.
Ask how many years of full-time experience she has, why she chose real estate as a career and what are her three strongest attributes when representing a client. Pay attention to credentials. Check the agent’s website or business card for his or her license. Search your state’s website for licensing or professional and occupational regulation.
ADVERTISING A top-selling agent is not necessarily the best agent for you. An agent with an impressive sales record might be quick at finalizing transactions. If you are in a hurry and need to get into a home fast, he may be perfect for you. However, he may not be the agent who is willing to tour 35 houses until you find the perfect fit or patiently hold your hand while you stress about the home inspection.
Keep your options open. Do not feel pressured to sign an exclusivity agreement. If you are struggling to decide between different areas — say, Bethesda and Rosslyn — tour properties with agents who specialize in each location. But once you find one with whom you are comfortable, stick with that agent. Location matters. Good agents tend to have a territory of expertise.
Ideally you want an agent who knows more about the homes than what’s written on the listing — and maybe even some of the neighbors. Which house in your favored neighborhood might come up for sale soon? Has the condominium association been contemplating a special assessment? This is the kind of helpful information a well-connected agent has. Talk with your agent. The relationship with your real estate agent has a profound impact on the transaction. From identifying and viewing properties to timely completion of the paperwork and occupancy of your new home, there are countless details.
You need to communicate easily, often and successfully with this person. Get smart. Learn about neighborhoods. Research the local real estate market and know what to expect in timing. If one neighborhood is more expensive than an adjacent area, don’t assume that it’s a fluke. Similar homes a few blocks apart may be priced differently because there is a top-rated school in the more expensive neighborhood, or because of upcoming plans for public transportation or other development.
These are things your agent should be able to tell you. Some home buyers want to go it alone. Rather than have real estate agents represent them, they hire real estate lawyers. Except in states where it is mandated by law, most real estate transactions do not require the presence of lawyers. But certain buyers can benefit from going this route.
A real estate agent has a financial incentive to see the deal go through. Most reputable agents will not let this consideration interfere with the advice they give you. A lawyer has no such incentive. He is paid regardless.
The buyer’s agent typically makes 3 percent of the home’s sale price. The seller usually pays the commissions for the buyer and the seller, but that cost is factored into the sale price. The seller may be willing to lower the price if you offer to pay a lawyer to represent you in the transaction.
You will be out the cost of the lawyer, but the seller won’t pay two commissions. Lawyers charge between $200 to $500 per hour. Some may agree to handle the transaction for a flat fee. Say a lawyer charges you a flat fee of $2,500 to represent you in the purchase of a $600,000 house. The buyer’s agent commission on the sale would be $18,000. If you can persuade the seller to reduce the price by $18,000, you have saved more than $15,000. Follow the same advice for hiring a lawyer as you would a real estate agent: Talk to friends, interview several lawyers, and pay attention to credentials.
If you are ready to start your buying or selling process
give me a call at 818-943-1177 -
I´m happy to answer all your questions.