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December 15, 2017

Speaking of Real Estate

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Updated: 8 min 12 sec ago

Charity Deduction Faces Same Tax Reform Risk as MID

Mon, 11/27/2017 - 14:31

Of all the itemized deductions, the one for charitable contributions might seem to come out the best under tax reform. That’s because it’s the only deduction under both the House and the Senate versions of the bill that is largely undiminished. And yet charities complain donations will dry up under tax reform. What gives?

“Provisions in the tax bill the House and Senate are considering would make the situation worse” for charities, Ray Madoff, director of the Boston College Law School Forum on Philanthropy and the Public Good, says in a Nov. 27 New York Times opinion piece.

The problem, Madoff says, is the near doubling of the standard deduction. With all of the other itemized deductions either going away or constrained by new caps, most households will opt for the standard deduction rather than continue to itemize. That renders the tax deduction for charitable giving nearly meaningless. As Madoff puts it, “A vast majority of American taxpayers would no longer itemize and therefore would receive no benefits for their charitable giving.”

That argument might sound familiar. It’s the same one NAR is making about homeownership. Under the Senate bill, the mortgage interest deduction would be left intact, but the deduction for state and local taxes would go away. In the House, MID would be limited to mortgages of $500,000 and the deductions for property taxes would be capped at $10,000, while the deduction for state and local income and sales taxes would be entirely repealed. So, while MID is preserved, either entirely or in part, very few households that itemize today would continue to do so. As a result, MID would continue to be a benefit only for the wealthiest households.

Given the structural changes to the tax code lawmakers have before them, preserving the deduction for charitable contributions is mostly meaningless. This is exactly the same thing REALTORS® are saying about tax incentives for homeownership. They’re meaningless for most households if tax reform passes in its current form in both the House and the Senate.

More on tax reform’s impact on homeowners in The Voice for Real Estate.

Don’t Just Sell a Home; Market a Lifestyle

Tue, 11/14/2017 - 12:59

Kevin Tengan told attendees at the REALTORS® Conference & Expo to remember that home buyers are looking for “a place for their life to happen.”

To help your listing stand out from the competition, focus on the lifestyle the property will help buyers achieve, in addition to common details such as square footage and number of bedrooms.

That’s the advice of visual effects specialist Kevin Tengan, who has turned his experience working on Hollywood productions into the foundation for a real estate business that reflects his love for imagery and storytelling. A buyer might say they want a four-bedroom, three-bath house with a sunny kitchen and a backyard, but what they’re really looking for is “a place for their life to happen,” he said during a session at the REALTORS® Conference & Expo in Chicago earlier this month.

“A lot of what we communicate is ‘what’ and ‘how,’ but few talk about ‘why,’” said Tengan, CRS, chief operating officer of RE/MAX Prestige in Honolulu. “Start with the why.”

As you develop marketing campaigns, remember that saying a home is in a great neighborhood isn’t as powerful as showing why that is the case, said Tengan. For example, if you produce a video property tour, include footage of nearby attractions such as beaches, museums, shopping districts, and other aspects of a community that can inspire a buyer to want to live in the area—not just in the home. Anything you can do to tie your listing to the lifestyle buyers want will attract more traffic, Tengan said.

One of the keys to developing marketing materials that will resonate with buyers looking for a certain lifestyle is understanding the trends that characterize the people you are trying to reach, said Emily Line, vice president of commercial services for Realtors Property Resource®. As a real estate professional, you have access to an enormous amount of data about what consumers are looking for. There are services that can sift through the information and create reports to help you develop an effective pitch, Line said.

The data can help you tune in to trends that reflect the kind of buyers you want to reach. You can identify people in certain kinds of occupations, where they like to shop, and what they like to do for entertainment, Line said. This information can help you connect with buyers in your area, as well as investors who want to purchase commercial or residential properties that will attract certain types of tenants, she said.

Turn the information you collect into a marketing tool by incorporating it into a story that connects the property to the goals and lifestyle of those who would buy it, Tengan said. “At the end of the day, the story is all that matters. A great story evokes a reaction.”

‘This is Our Moment. Own it.’

Mon, 11/06/2017 - 14:10

“Are you ready to own it with me?”  asked Elizabeth Mendenhall, a sixth-generation REALTOR® and the sixth woman to become president of the National Association of REALTORS® in the past 110 years. “We absolutely have the power to make a difference.”

Mendenhall was sworn into office by her father Richard Mendenhall, who was 2001 NAR president. “There is nothing more powerful in this journey than sharing it with others,” she said addressing thousands of REALTORS® at the Inaugural gala during the REALTORS® Conference & Expo in Chicago.

Mendenhall ended her inaugural festivities with a group rendition of “REALTORS® Own It”—the vibrant tune that she co-wrote for her presidency. The song evokes the pride and power embodied in dedicated real estate pros who strive each day to meet the complex needs of their clients and keep the industry strong.

Your New Real Estate Motto: ‘Helping Beats Selling’

Mon, 11/06/2017 - 12:59

Marketing Expert Kelly McDonald offers indispensable advice for connecting with prospects and clients.

Think of the U.S. as a “salad bowl”—rather than a “melting pot”—that integrates many different cultures as you develop marketing strategies to reach a diverse set of prospects and clients. Marketing expert and author Kelly McDonald offered attendees a range of tips to foster strong and meaningful connections in her Monday session, “How to Market and Sell to People Not Like You,” at the REALTORS® Conference and Expo.

  • Be relevant in your marketing. “Identify what people want, and give it to them,” McDonald said. You may have lots of information about the features and attributes of a property to share with buyers, but that matters much less than keying in on “why it benefits them. You have to be able to make sure people understand ‘why I should care’ about what you’re telling them.”
  • Adapt to the needs of your clients and prospects. People need you to understand and relieve their pain, but you need to know what the pain points are,” McDonald said. She cited an example of an auto glass repair company that set up an introduction system so that customers knew which technician would be coming to their home. They sent along a photo in advance, so clients knew who to look out for. “This addressed the strong need women have for a sense of security and great personal service, she said.
  • Keep your communications short. Your clients and customers don’t have enough time in their lives as it is, so present information “in bite-sized portions,” she said. Use white space between paragraphs and bullet points to increase the chance people will read what you send them. “Whenever possible, shorten your voicemail and emails, and use pictures and graphics to make your points.”
  • Cultivate your ‘pilot fish.’ It’s important to know what you’re doing wrong, but you may not learn what that is until you ask someone with whom you’ve done business. “People won’t tell you if you don’t ask them,” she said. “And don’t be afraid of acknowledging the problems. You can’t fix them if you don’t know about them.”
  • Foster a culture of empathy when hiring. “It’s more important to hire the right person than the right resume,” McDonald said. “Don’t be afraid to recruit from new ponds” because you can always get them up to speed on the tasks and skills needed for the job. “Awesome people are awesome no matter where they are working.”
  • Don’t be defensive when you’re wrong. If something is going haywire with a transaction, people only want to hear five words from you: “We’ll take care of it.” The blame game is never productive, so “stop offering excuses when things go wrong. People want to know how you’re going to take care of problems, so unless they ask for a lot of details about how something went amiss, don’t go there,” she said.

The Secrets to Becoming a Better Leader

Mon, 11/06/2017 - 10:29

Whether you’re managing a small team or a large office, your brokerage’s success will depend on how good you are at inspiring and motivating those whom you manage.

“If you don’t get leadership right, everything else will fall apart,” said Alicia Matheson, business coach for Matheson Global Consulting, as she led a crowded session Sunday on “Evolutionary Leadership” during the 2017 REALTOR® Conference & Expo.

The problem is that many leaders may believe they’re better leaders than they actually are, she said, citing a Gallup poll that showed 90 percent of managers rate their leadership as above average. However, a separate Gallup poll found that employees say that the best day on their job is when their boss is out of the office.

“We’re only as great as the people we lead say we are,” Matheson said. Also, “it’s important to not just be a ‘good’ leader but a ‘great’ leader. There is a huge gap between ‘good’ and ‘great.’”

Matheson highlighted several skillsets of a stellar leader: the ability to inspire, be knowledgeable, provide resources and support staff, and be creative in sharing new and innovative ways for agents to conduct their business. “Being a better leader starts with collaborative ideas and pushing the boundaries of human capital with cutting edge technology and innovation,” Matheson said.

It’s important to lead by asking your team questions, she said. For example, what support do they need from you to do their jobs better? How is their business going?

Make sure your agents and staff understands your company’s overall purpose, too. If you get a buy-in from everyone in your office, they’ll feel more motivated, inspired, and loyal to their jobs, Matheson said. The purpose may include a commitment to a charitable cause, or your core mission of helping buyers and sellers achieve their dreams in homeownership. Articulate your vision in a clear, memorable way.

“Show people you care and make people want to be a part of your brand,” Matheson said. “Connect your behaviors to your purpose. We may judge ourselves by intention, but others will judge us by our behaviors.”

Here are Matheson’s 11 key everyday habits of effective leaders:

1. Wake up early every day.

2. Make your bed.

3. Workout. If you don’t have time to exercise, strike a “power pose.” Channel your inner Superman or Wonder Woman, and strike a powerful pose and hold it for 2 minutes. Research shows that workers are 33 percent more productive when they do. Matheson said a brokerage she works with started integrating the power pose in their team meetings, and after a month their sales shot up by 30 percent.

4. Have a healthy breakfast.

5. Review your day and maintain a journal.

6. Create a plan of action for the day. (Consider: Who can I make smile today?)

7. Meditate or visualize your day (e.g. Visualize what a successful day will look like.)

8. Finish the most important or difficult task first.

9. Create an outline for the following day’s activities.

10. Learn or read something inspirational.

11. Go to bed early. (Commit to 7-8 hours of sleep each night; research has shown it can increase your productivity.)

Sal Giunta’s Strive for More

Sun, 11/05/2017 - 17:53

By Lauren Tussey

Sal Giunta

To kick off the final day of the 2017 REALTORS® Conference & Expo in Chicago, Staff Sgt. Sal Giunta spoke about his journey from 18-year-old Subway employee to a service member earning the highest award available to members of the U.S. military.

“We are all in this world together. We all have opportunities. We all have the ability to do more,” Giunta said. As a soldier, he bravely ran into enemy fire to save American soldiers from the Taliban. His heroism earned him the Medal of Honor in 2010, making him the first living recipient of the award since the Vietnam War. He challenged those at the Sunday session to take his “100 percent challenge” every day.

“It’s taking advantage of the time we have and doing the best we can,” Giunta said. “And if you fail, don’t quit.”

5 Ways to Be a Better Neighbor

Sun, 11/05/2017 - 17:52

From left, Good Neighbors Louise McLean, Bryson Garbett, Howard Hanna, Kay Wilson-Bolton, and Sal Dimiceli.

For communities to be strong, neighbors must unite and contribute to the overall well-being of their areas. But you don’t have to lead a charity or be an activist to make a positive impact where you live. REALTOR® Magazine’s 2017 Good Neighbor Award winners are a testament to just how big of an impact you can have in a community. The honorees were celebrated for their philanthropic leadership at a gala during the REALTORS® Conference & Expo in Chicago on Saturday night. These community advocates imparted some advice on how everyone can be better stewards within their communities.

1. Don’t wait for a crisis before offering to help.

Louise McLean, whose nonprofit provides necessities for more than 2,200 homeless children in Florida’s Brevard County, recalled Hurricane Irma’s recent devastation in her state. “We shouldn’t wait for a storm to hit to be a good neighbor,” McLean said as she accepted her award. “Every day, someone is dealing with a storm in their own lives.”

For McLean, those are the children living in cars and using gas station bathrooms to get ready for school. She spoke of one 18-year-old boy who dropped out of school to care for his terminally ill mother, who had cancer. After her death, he had to get a job to support his family rather than return to school. But when his scoliosis made it difficult to maintain employment, his uncle kicked him out of the house. McLean’s foundation was able to pay for a place for him to live, provide him clothes, and put him back in school. “He’s a good student, and he just wants to graduate,” she said. “It only takes a little bit from a lot of us to make a difference.”

2. Start a chain of good deeds with one small gesture.

Bryson Garbett said even seemingly simple things can lead to long-term dramatic changes in people’s lives. Garnett has helped build 177 classrooms over the last 18 years for nearly 100,000 students in the poorest regions of Mexico. “If I can be part of a student’s lifeline, perhaps I can set off a chain reaction that will change an entire life or a generation,” he said. “Something as simple as a backpack on the door of a shack can represent the most unspeakable beauty of better things to come.”

Garbett’s efforts have helped others like young Anna, who had to make dinner over an open fire every night for her and her grandmother because they didn’t have a stove. Today, Anna is on track to be the first person in her family to graduate from high school. She plans to become an engineer. “The stories of the lives I’m helping to change are what drive me,” Garbett said.

3. Appreciate the people who share your vision.

Howard “Hoddy” Hanna, whose real estate company has raised more than $14 million for children’s hospitals worldwide, thanked his 9,000 agents around the country for buying into his philanthropic vision and helping him achieve his goals. No one achieves their greatest dreams alone, Hanna said. “I owe everything I’ve accomplished to the great people who work for me and my family,” said Hanna, who runs the company with his sisters.

4. Don’t leave it to others to address a pressing need.

Kay Wilson-Bolton said many in her community may be naive to the extent of homelessness in the area. “They’re invisible to my community, but they’re not invisible to God,” Wilson-Bolton said. “But I’ve never met a homeless person who didn’t have a mother, a birthday, a first day at school, or who didn’t once believe in Santa Claus.” Everyone—no matter what walk of life they’re from—deserves to be treated with humanity, she said. Wilson-Bolton’s charity helps to feed up to 600 homeless people a week. 

Wilson-Bolton admitted that at one time, she wasn’t even aware of the extent of the homeless problem in her area either. But she refused to wait for someone else to do something about it. “I’ve learned to never say where I will not go or what I will not do,” she said. “God uses us to change lives. I’ve seen people returned to families and healed from shame and broken hearts.”

5. Show humility when someone asks for help.

Sal Dimiceli, who has helped thousands of poor people out of poverty, said that on a daily basis, he witnesses those who are struggling to afford shelter, food, and utilities. He devotes 10 to 12 hours a day to bring relief to people through his charity, Now Is the Time to Help. “I’ve looked into the eyes of children who are suffering, or senior citizens living in fear that they will be evicted,” Dimiceli said. “When I see the look in their eyes change from desperation to hope, it fills me with joy.”

Dimiceli, who has contributed $5 million of his own money to the charity, recalled growing up poor himself. He said his mother would regularly cry over their family’s disadvantages. It’s the memory of her tears that drives him to help others. “When I see pain, I address it,” he said. “That’s how I treat all of God’s creations.”

Builders: Inventory Woes Not Our Fault

Sun, 11/05/2017 - 17:50

A shortage of homes for-sale continues to weigh on the market and is one of the biggest obstacles facing home buyers. But homebuilders say stop blaming us.

“It does feel like every other [report] has Lawrence Yun [NAR’s chief economist] saying, ‘Builders need to build more,’” Robert Dietz, chief economist of the National Association of Home Builders, told attendees at Sunday’s session, “Housing Needs More Supply: Two Perspectives.” “Yes, we would like to, but there are reasons [why we can’t]” add additional new-home inventory.

Dietz pointed to a labor shortage, pricier lots, and strict local regulatory policies as compounding the issue. Further, two-thirds of homebuilders recently surveyed by NAHB said they’d build more if there were more lots available, Dietz said.

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‘Catch Me if You Can’ Conman Divulges Identity Theft Prevention Tips

Sun, 11/05/2017 - 17:27

Former con artist Frank Abagnale knows first-hand how easy it is to assume another person’s identity, and he’s now devoted his life to helping others avoid getting duped.

Abagnale’s story is well-known: From the ages of 15 to 21, he assumed identities as an airline pilot, physician, lawyer, and others. His story was depicted in the 2002 hit movie Catch Me if You Can, starring Leonardo Dicaprio. Abagnale, who was eventually caught and imprisoned, became a consultant for the FBI for more than 40 years fighting fraud and crime.

“Your most important job is to protect the data that is entrusted to you by your client,” Abagnale told a crowd during RISMedia’s 22nd Annual Power Broker Reception on Friday night during the REALTORS® Conference & Expo in Chicago. You also need to be vigilant about your personal information.

Abagnale offered up tips for safeguarding against identity theft:

Shred everything. Anything with personal information on it—even a magazine with a sticker that contains your name, address, and source code—should be shredded. “All a true identity thief needs to become you is your name and ZIP code,” Abagnale said. “What you may think is worthless is of value to an identity theft.” A traditional shredder that cuts items on the vertical or crisscross, however, can be assembled by FBI agents within 30 minutes; so, expect criminals can do the same, Abagnale said. Instead, use a micro-cut shredder, which turns paper into pieces the size of rice that cannot be put back together.

Don’t write a lot of checks. Your name, address, phone number, bank’s name and address, account number at that bank, routing number into that account, and your signature are all contained on a check. Then, a clerk might write your state driver’s license number and date of birth on it too. “Anyone who sees your check could potentially wire money out of your account,” Abagnale warned.

Only use a credit card—not a debit card. The safest form of payment: A credit card, he said. If someone takes your credit card and makes a charge, you can contact the credit card company, and your liability is zero. Your card will be canceled and you’ll be issued a new one. But when a debit card is stolen, a thief could withdraw funds directly from your account that will be difficult to get back. What’s more, when you use a credit card and pay your bill every month, your credit score goes up. A debit card does nothing for your credit score, Abagnale said.

Watch what your social media accounts say. On Facebook, for example, never divulge your date of birth or where you were born, Abagnale warned. Avoid having a profile photograph that is taken of you from straight-on, like a passport photo would be. Remember, anything you ever post, even if deleted, can always be retrievable. “There’s way too much information about you in the world,” Abagnale said. “We just keep giving people more and more about us, and then we wonder why they steal from us.”

 

How 3 Agents Used Real Estate to Pay Off Student Debt

Sun, 11/05/2017 - 17:21

Megan Hornsby and Harrison Beacher

Three millennial real estate professionals say their jobs were key in helping to retire student loan debt and get on track toward a stable financial future.

Tyler Meyer of Shorewest, REALTORS®, in Delavan, Wis.; Harrison Beacher of the Harrison Beacher Group in Washington, D.C.; and Megan Hornsby of RE/MAX Preferred Associates in Maumee, Ohio, spoke during a session at the 2017 REALTORS® Conference & Expo in Chicago on Sunday about how getting into real estate right out of college gave them the financial means and discipline to escape the student debt trap that plagues so many of their peers.

American students collectively carry $1.7 trillion in outstanding student loan debt—which is second only to mortgage debt—and much of that is owed by millennials, according to data from NAR and American Student Assistance. Only 20 percent of millennials are homeowners, a low number due in part to the debt many are carrying, and 83 percent say their loans are delaying their ability to purchase a home.

Hornsby, who worked as a property manager right out of college, said she was able to pay off her $40,000 debt by buying an investment property in the Toledo area. She and her husband, who’s also a practitioner, bought subsequent houses. Through careful management of their rental and commission income, they were able to retire their debt relatively quickly and amass a sizable portfolio of rental properties.

Beacher, who earned his real estate license after college, paid off his $40,000 in debt over several years by focusing on the first-time home buyer marker. To get started, he leveraged some 3,500 contacts he had on Facebook, many of them his age, and held home buyer seminars. However, what was key for Beacher was taking a disciplined approach to saving. He sought help from a financial planner and accountant from the start and was careful to allocate a percentage of every commission check toward taxes, savings, and his business.

Meyer amassed $39,000 in debt from a single semester before leaving college early and getting into real estate. He reached out to a mentor and brought an assistant on board. The mentor helped Meyer focus on expired listings, and he listed 54 homes over two years. That enabled him to pay off his debt in just 16 months.

To Get Higher Sale Price, Client Could Refinish the Floor

Fri, 10/20/2017 - 08:15

What does it cost to make old hardwood floors look new again? Let’s say it costs $3,000. That’s a lot of money, especially for owners who just want to get their house on the market and be done with it. But of all the remodeling projects homeowners can do to increase the resale value of their house, refinishing the floors is right up there at the top.

Of course, no one can predict with certainty if an investment will pay off, but recent research suggests owners who redo their floors will get their investment back, and maybe a bit more. New windows and a new roof are also cost-effective ways to get a higher sale price when the home goes on the market.

The cost-effectiveness of almost two dozen remodeling projects is analyzed in research NAR put out a few weeks ago in partnership with the National Association of the Remodeling Industry. The findings are detailed in the latest Voice for Real Estate news video from NAR.

Tax reform

The video also looks at why NAR is concerned with the tax reform framework that members of Congress and the Trump administration are looking at. The framework seems like a win for middle-income households because it calls for a near doubling of the standard deduction, but what often gets lost in the debate is that it also calls for the elimination of the personal exemption and the exemptions for dependents. Depending on family size, whatever gains one gets from the higher standard deduction would be wiped out by the loss of the exemptions. Meanwhile it calls for eliminating most itemized deductions, including the deductions for state and local taxes, which means many households that now itemize would be better off taking the standard deduction. As a result, they would in many cases end up paying more taxes.

On the plus side, the framework leaves the mortgage interest deduction in place, but that’s not going to be enough for most homeowners to itemize. Without the state and local tax deductions, many would still find themselves choosing the standard deduction—and paying higher taxes as a result.

The video also looks at why 1031 like-kind exchanges are so beneficial to commercial real estate, why home sales are expected to drop despite continuing strong demand, and what to do to keep your transactions on track in the weeks after a natural disaster.

Access the video.

What Does President Trump’s Association Health Plan Executive Order Do?

Wed, 10/18/2017 - 13:59

The executive order President Trump signed on Oct. 12 to expand association health plans (AHPs) is of interest to REALTORS® because NAR has a longstanding interest in these types of health plans. But it’s important for real estate professionals to know what the executive order does and doesn’t do.

First, it doesn’t itself expand association health plans; it only directs a handful of federal agencies to consider ways to amend existing rules with the aim of expanding the plans. And second, the rules that would be amended are federal labor rules, and these rules apply to employees, not independent contractors. For that reason, NAR has expressed an interest in working with the administration to see if changes can be made in the future that would expand AHPs for independent contractors.

To learn more about the order, Jon Boughtin of NAR Media sat down with Christie DeSanctis of NAR Government Affairs to learn what the order does and doesn’t do. Watch video.

Why Doubling the Standard Deduction Won’t Help Most Homeowners

Mon, 10/09/2017 - 11:12

One of the most talked-about provisions in the tax reform framework that the Trump Administration and Republican congressional leadership released a few weeks ago is the doubling of the standard deduction. Of all the changes the framework would make, this one is presented as something that will help middle-income households. And that is true, but the households that it mainly helps are renter households. Home-owning households will likely see their taxes go up even if they were to take that increased standard deduction. There are two reasons for this.

First, although the standard deduction would increase from $12,600 for a family to $24,000, the plan would do away with the personal exemption and the exemption for dependents.

Right now, those exemptions are $4,050 per person, So, for a family of four, the family would see their standard deduction rise from $12,600 to $24,000 but they would also no longer get to take their exemptions, which, under the current code, would total $16,200. So, they would gain almost $12,000 but lose more than $16,000. Households with larger families would lose even more.

Second, for homeowners who are used to itemizing their deductions, all of these deductions except for two—the deductions for charitable giving and mortgage interest—would go away. For many middle-income households (those earning between $50,000 and $200,000), the two remaining itemized deductions won’t be enough to make it advantageous for them to continue itemizing. That’s mainly because they would lose the deduction for state and local taxes, which, for many households, is the single largest itemized deduction they take, even larger than the deduction for mortgage interest. As a result, they would almost certainly stop itemizing and instead take the standard deduction. While that might give some of them a better tax picture than if they continued to itemize, it would nevertheless be less than what they receive in tax benefits under the current code.

Just as importantly, the change would wipe out the distinction between owning and renting in the tax code. That’s a distinction that’s been part of the tax code for more than 100 years and losing it would result in an across-the-board drop in home values by 10 percent or more, NAR estimates.

Of course, everyone’s tax picture is unique. How one person or one family comes out under the proposed changes will differ based on many factors–household income, household expenses, the number of dependents, the size of the mortgage, the state a household lives in, and so on. But in general, based on analyses NAR and other organizations have either done themselves or commissioned others to do, the result won’t be a net gain for most middle-income households but rather a net loss. That’s why NAR and many other organizations are opposing the changes the framework is proposing.

NAR’s concerns are detailed in the latest Voice for Real Estate news video. Watch now.