Read my blog

28
Feb

Coming Soon Signs On Properties

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®

Leave A Comment

Only your first name and last initial are displayed with your comments.
Your email is never displayed. We will only contact you if you ask a direct question.
Anti-Spam: Enter the answer to this math problem into the box:   3 + 6 =
Your Dedicated Agent

Dawn Peterson

DRE02032202 Mobile: 818-943-1177 Office: 818-943-1177

Home Smart Evergreen
18429 Nordhoff St Suite A
Northridge, CA 91324
818-943-1177
Communities Served

I´m Here To Help

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.

Contact Me Today