Monday
October 23, 2017

Speaking of Real Estate

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Updated: 1 hour 8 min ago

To Get Higher Sale Price, Client Could Refinish the Floor

Fri, 10/20/2017 - 09:15

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 - 14:59

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 - 12:12

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.

If You’re In a Hurricane-Hit Area, the Federal Government Might Have a Job for You

Mon, 10/02/2017 - 12:54

The U.S. Small Business Administration is looking for damage verifiers in the parts of Texas and Florida that were hit by hurricanes. Damage verifiers are people who use their knowledge about real estate to give the agency their assessment of how much damage a structure  sustained in the storm. By one estimate, almost 150,000 structures were damaged by Hurricane Harvey, so there appears to be a need for many damage verifiers. In Florida, just in the Florida Keys, at least a quarter of all structures were damaged. The SBA is also looking for people to do about half a dozen other contract jobs related to storm recovery, including loan processors.

The SBA opportunity is a top story in the latest Voice for Real Estate news video from NAR. The video also looks at the so-called Big 6 tax reform framework, short-term reauthorization of federal flood insurance, and how to protect your data and your clients’ data from cyber criminals. The video also provides an update on home sales.

Access and share the video.

Small Markets See 4% Gain in Commercial Property Sales

Mon, 09/18/2017 - 08:40

Smaller commercial properties in secondary markets are still attracting buyers at good prices, but demand for big-market mega-properties appears to be easing, NAR second-quarter data suggest. Large markets saw a 5 percent annual decline in sales, while smaller markets saw a sales boost of 4 percent.

“Shrinking cap rates and the higher interest rate environment are expected to lead to a plateau in price growth over the next year, especially for Class A assets in large markets,” NAR Chief Economist Lawrence Yun says. “As a result, investors will continue to look to small and tertiary markets for properties that have the best opportunity to provide stability and generate solid returns.”

On a national basis, vacancy rates are expected to retreat 1.1 percent to 11.9 percent for offices, 1.1 percent to 7.8 percent for industrial properties, 0.4 percent to 11.4 percent for retail, and 6.6 percent to 6.1 percent for apartments.

“A very healthy labor market and stronger confidence and spending from both consumers and businesses boosted economic expansion to a solid 3.0 percent last quarter,” says Yun.
“There’s momentum for more of the same growth to close out the year, which bodes well for sustained interest in all types of commercial space.” Yun added that the demand cycle for properties in larger markets is maturing, which means investor interest will likely focus on smaller markets.

Coverage in The Voice for Real Estate.

25% of Male Agents Carry a Gun

Tue, 09/12/2017 - 15:37

Safety is a concern in the real estate industry and it’s not limited to female agents. Recent NAR survey data show that a quarter of men in the business carry a gun to protect themselves. The survey is based on a sample of the NAR membership. Almost 49,000 members were sent the survey and a little under 3,300 responded, for a response rate of 6.7 percent. That puts the margin of error at plus or minus 1.72 percent.

The 25-percent figure of men carrying guns might not be even across the country. More men might carry guns in one area, skewing the national figure higher than it otherwise would be. But, either way, it’s an eye-catching figure. For women, the corresponding numbers is 12 percent. That puts total gun-carrying agents at 16-percent. Overall, pepper spray is the most common self-defense weapon agents use, at 19 percent.

Safety apps are popular. Almost half of all female agents have some type of safety app on their phone. Although the apps differ, one common type of app is simply a way for someone to alert someone else where they are by pushing a button.

Actual violence against agents remains relatively rare, although even one violent act against an agent is one too many. About 5 percent of agents say they’ve been a victim of a crime while on the job. That includes non-violent crimes like having data stolen. About 4 percent of agents self-identify as having been victim of a physical crime: 2 percent say it was robbery, 1 percent say it was assault, and 1 percent prefers not to say.

The fear of crime is quite high, understandably, given that the job often entails meeting people for the first time in different types of settings. More than 40 percent of women in suburban markets say they have felt afraid at one time or another. Sometimes it was at an open house, sometimes it was at a showing.

The data is from an NAR safety report that was released a few weeks ago. It’s a top story in the latest Voice for Real Estate news video from NAR. The video also covers how REALTORS® responded to recent hurricane damage, what’s happening with flood insurance, and how commercial markets are faring (good in secondary markets and less good in bigger markets, where big properties are seeing prices flatten). Watch the video. 

 

We Know We Need Housing and How to Get It. Unfortunately, That’s Where We Stop

Wed, 09/06/2017 - 09:39

Chuck Reed

The United States has a housing shortage. That’s why home prices are rising faster than what many people can afford. But in California, the housing shortage is a crisis. Many people want to live and work in the state, but developers have little incentive to build housing the average person can afford, especially in the hot areas like San Francisco and Silicon Valley. And government hasn’t found the will to be the solution. As former San Jose Mayor Chuck Reed says, “California cares about housing—just not enough to do anything significant about it.”

Reed, who was term-limited in 2014 so couldn’t run again after eight years as mayor and almost 30 years in local government, is an attorney who specializes in land use issues. He was one of the featured speakers at a housing conference NAR hosted earlier this summer in Berkeley, Calif., and his remarks to REALTORS® make it clear he has no shortage of ideas to help get affordable housing built. Of course, his ideas focus mainly on California but they also provide a roadmap the rest of the country can follow.

Take the battle to the Supreme Court

For starters, we should take aim at all the hoops local governments put developers through to get building plans approved—occupancy limits, profit limits, eviction rules—by litigating these restrictions all the way up to the U.S. Supreme Court. As he puts to, “That is the only court where the 5th Amendment seems to be taken seriously.”

Next, change states’ fiscal restrictions to favor housing. He’s speaking about California, but there are lessons here for all states when he talks about modifying property tax allocations so that housing permits generate enough money for cities to pay for increased service demand. He also says states should share sales taxes based on where people live rather than where they buy things. And state and federal transportation money should be allocated to support high-density housing rather than the single-family house on the large lot in the suburbs.

He also wants to see environmental and other reviews streamlined so they’re not used to block developments just because people don’t want them in their backyard.

Long-term, people who care about housing, like REALTORS®, should continue to elect legislators who understand you can’t have job growth without also having places for workers to live.

Reed says California is organized  to make it hard to build housing of any kind, but as the housing crisis makes clear, economic development is only half the equation. The other half is having homes for the people who take new jobs. That’s a lesson that we benefit from no matter what state we’re in, as the continued housing storage throughout the country shows. Click on the PDFs below to read Reed’s full remarks.

Other coverage from the conference.

Conference coverage in the June 12 Voice for Real Estate video:

Sponsor Webinar: Using Big Data to Create Effective Marketing Strategies

Tue, 08/29/2017 - 14:17

The following is promotional copy for a Quicken Loans webinar on how real estate professionals can use data mining in their marketing. REALTOR® Magazine is promoting the webinar because it believes the content might be useful to its readers, but it did not participate in creating the webinar.

Patrick Chism

In one of the most competitive industries in the world, real estate professionals can adapt to the times to find the right clients and reach them in the right way. It’s no longer just a matter of “trusting your gut.” If you’re looking for trends to push your business to the next level, you can pursue big data opportunities.

Patrick Chism,  a marketing lead on the Quicken Loans Social Media Team, will host a webinar on using data in your marketing on Wednesday, Sept. 20, at 3 p.m., Eastern time.

Chism is a writer and conversion strategist for the Zing Blog. Specializing in personal finance and entrepreneurial content, he enjoys breaking down complicated concepts into bite-sized information. He has also spent the last two years testing pizza dough recipes, and he’s close to finding the perfect crust.

Using Big Data to Create Effective Marketing Strategies
Wednesday, Sept. 20
3 p.m., Eastern time

Sign up.