When Should You Walk Away From Making An Offer On A Home

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I have often been asked this question by clients when should you walk away from making an offer on a home. Now of course, being the know-it-all that I am, I was eager to jump right in and take on this question many times. And of course I can’t count how many times I have actually answered that question. But as time has passed by, I realized, I am not the expert, my Real Estate Agents are! Yes believe it or not, I did get smarter with age. So I reached out to a group of smart, beautiful, knowledgeable Real Estate Agents from across the country to get their take on when you should walk away from making an offer on a home, and I wanted to share with you their thoughts. I absolutely love Real Estate Agents, and I am proud to know, like, and trust each and every one of them.

So without further ado, here are your responses……………………..

As an agent it is our job to find them a home they want which they are not settling for. For example, if the home is over priced, it is our duty to let our client know that we can find something better out there at a better price if the seller doesn’t take the offer we present.

gini-khushvinder kaur          Gini-Khushvinder Kaur- Re/Max GOLD Fresno, California

When I know they do not have the money to pay for repairs and make their down payment. I don’t care what kind of deal they think they are getting.

anne langley     Anne Edwards Langley- Keller Williams Community Partners Cumming, Georgia

I would say at the point where the seller holds so much of an upper hand that the buyer has to settle and is no longer comfortable with the transaction. There is always another house.

Melanie Regnier  Melanie Regnier-Re/Max Advantage Realtors, Inc. Salina, KS

If they are not qualified or approved for a loan.
They should not even look at homes before an approval is given.
shaneza jabar  Shaneza Jabar-Keller Williams Hunters Creek Orlando, FL
I would ask my client to think about what they want after everything is said and done, when I’m gone and they are now making their life in this home. Will they be satisfied and content in knowing they purchased this property or will it be years of regret and/or worry about how they can afford to stay there?
olga vega  Olga Vega-Double Diamond Real Estate, LLC Merrillville, IN
When the property is much older and the asking price is much higher than the estimated market value. Here in Cali, the market is really hot. The sellers are placing their properties a lot higher than what the market analysis suggests. If my buyer buys a property which is already negative on equity, then they are not placing their money in the right property and It would be very wrong for me to not advise them against it.
amy armine palian  Amy Armine Palian-JohnHart Real Estate Van Nuys, California
As-is” and property showing its not been kept up or pieced together and possible major repairs needed (roof or large cracks in foundation, for example).
valerie spiwak
Valerie Spiwak-Aspect Real Estate and Consulting, Inc Syracuse,NewYork
I ask my clients, when telling people about the story of this deal, would you rather brag or mumble? When making an offer/being involved in a bidding war, please tell me at what point would explaining become justifying this purchase? At what point would your final decision become a disappointment as opposed to you being at a place that you feel comfortable with the amount you are choosing to spend? Where is the point that you make your decision with no regrets? If you don’t know, then have you reached that point? In the case of what to offer, doubt means don’t.
sesalee moore  Sesalee Moore-Ingenious Moves Real Estate Chicago, IL

 

The most often that I advise a buyer to walk away is when I see them “biting off more than they can chew”.  Normally when they are trying to buy a property at the higher end of what they qualify for, and the property is being sold “AS-IS” and requires obvious repairs, and they do not have adequate reserves (money saved up) to cover them.  Remember the movie The Money Pit?  That is a real life scenario.  Especially with first time homebuyers, their eyes are wide with excitement, and my eyes are looking at the big stain in the ceiling, the fogged windows, the old A/C unit and the rotted wood around the side of the house.  They are screaming “Yes”!  And I’m thinking  $30,000 in repairs?  No!! For me buying and selling real estate is not about getting people to “sign here” and sometimes you can lose a sale, but I sleep better at night know that I told you all the pros and cons of your decision.

karen butler  Karen Butler-Coldwell Banker United Realtors Fort Walton beach, FL

 

For an Investor who is looking to Buy and Hold— If the project exceeds the ARV, I would suggest them to walk away. For an Investor who is looking to FLIP– If the project exceeds the 80% of  the ARV, I would suggest them to walk away. For an FHA buyer not looking to do a 203k Loan — If the property appears as if it doesn’t meet the current FHA property standards guidelines. For a Condo buyer— If the association is not in the Black or for FHA, if the association hasn’t been FHA approved. For a buyer that is cash strapped— Steer them clear away from Auction properties, as they require 5%-10% buyers premium. For ANY buyer—If you don’t absolutely LOVE the property—WALK… Because the HARD part about buying a home is sticking with the PROCESS of the purchase. The anxiety of the home inspection and of the loan process, the waiting for a short sale, all the paperwork, letters of explanation, etc…YOU HAVE TO LOVE IT! Don’t Settle, otherwise, at the 1st sign of ANYTHING… you want to cancel.

Carmen Bruton-Carter Carmen Bruton-Carter-Carter Realty Group Joliet, IL

 

When it doesn’t align with the goals and desires of my clients.

gayla bural  Gayla Bural- Lee’s Summit Keller Williams Lee’s Summit, Missouri

 

My usual answer to every client is a “emotional intelligence, gut check, 6th sense, intuitive core” combined with some actualization role play when we are at the crux of determining whether to move forward with an offer. Example: imagine yourself on closing getting the keys? How do you feel? OR imagine this property “pending” tomorrow? Again how do you feel? Regarding feeling I see it a couple ways – 1. the butterflies mixed with anxiety but adventure lingers in the future OR 2. The airplane bag – it’s just going to be a long day. Number 1 is great in my book – Number 2 will usually only get worse over time and most often signals underlying issues that may not be immediately seen on that specific home but are felt. I also run my feeling meter after we have submitted an offer, after it is accepted, after inspection and all the way through the final document signing. The last thing I want is a buyer that is Meh at the time we record and pass keys. That’s why for my team we are diligent about exploring the emotional process when buying a home. Sometimes a home may seem perfect on paper but it’s just not the right fit for some reason either tangible or intangible.

dave holland  Dave Holland-Cascade Sotheby’s International Realty  Bend, Oregon

 

I had one where the property is a FSBO and there were no disclosures or they were very vague… Also, the seller is very vague in his intent to honor buyer agency… In a case like that I don’t feel I can fully represent my Buyer client if I support them in their decision to make an offer on the property…

krisztina menzies  Krisztina Menzies-Patterson-Schwartz Real Estate Newark, Deleware

 

If you know the offer is out of your budget or will put you in a financial bind (if accepted)… walk away. Making your dream a reality should not include discomfort over making a mortgage payment for your dream home.

anika brewster   Anika Brewster-REAL People Realty Chicago, IL

 

 

Don’t make an offer on a property based emotions, other people’s influence, or to solve a short term problem if you plan on leaving there long term.

joselyne muszynski Joselyne Muszynski-Keller Williams Realty Orlando, FL

 

Can you smell that? That’s mold. Walk away. Actually run!

karen copeland  

 Karen Y Copeland-Q Williams Real Estate Associates La Plata, Maryland

 

Showing buyers the intense repairs on a house that is being sold as is because seller doesn’t want to fix their own problems.. Big concern for any buyer that doesn’t have the capabilities fixing the repairs!!

myrietta leach  Myrietta Leach-ReMax Pro Hays, KS

 

I believe it’s very important to know what they are approved for on purchase price so the buyer doesn’t cut themselves short or fall in love over their budget. Even once they feel they have a price range they are approved for they them need to be comfortable w/ their budget & payment. Then when looking they should walk away if the house will make them house poor & make them resent their decision. This makes an exciting experience go south!

kendra smith trueblood Kendra Smith Trueblood-About You Realty Russell, KS

 

Establish your main objective and stick to it- eg. to buy a home in X school district and spend no more than Y dollars. Also have a Plan B in place as far as living arrangements go if you are in a time crunch. Before making an offer, the question you must ask yourself is whether your primary objective has been met. If it has not, be prepared to walk away, regardless of how hot a property might be, how perfect it is if only you could move it a few blocks over, or if your lease is running out soon. Ultimately, you will be dissatisfied if you end up in a school district that is less than favorable to you, or you feel like you were pressured into paying more than you were comfortable spending in order to secure a particular home in a multiple bid situation. Stay the course!

suz backstrom Suzanne Backstrom-Metro First Realty Yukon, Oklahoma

 

This really depends on the property, the client and the scenario we are in. In most cases, you need to go with your gut. Take your pocketbook and your emotions out of the equation and listen to what your gut is trying to tell you. If you have to talk yourself into a deal, it’s not the right deal. If you truly allow your intuition to take over, you’ll be able to make the best decision. If the deal in front of you isn’t the right one, that just means the right one is still out there. Listen to your inner self when it speaks to you!

jennifer stradtman  Jennifer Stradtman-Keller Williams Premier Realty Woodbury, MN

 

It depends on the condition of the property, response from the seller and or his agent more importantly the status of the loan application . And It depends on the inspection report and what the seller is willing to repair or replace.

shelly white  Shelly White-Dynamic Realty Advisors Dallas, Texas

 

Often buyers set a price cap on search criteria, get frustrated that they’re not finding what they’re looking for in their budget, so they start looking outside of their budget, even though they can’t afford it. I am seeing buyers lately want to low-ball homes out of their price range that are already priced competitively. I suggest against it because its an emotional process to write offers and wait, and I don’t want to spin their wheels or mine wasting energy and anticipation on something that’s not going anywhere.

SONY DSC  Nicole Caldwell-Hawkins Poe Gig Harbor, Washington

 

Well there you have it ladies and gentlemen. These are some great answers to the question when should you walk away from making an offer on a home, from some fantastic Real Estate Agents across the country. Definitely better than I could ever come up with. Thank you to all that participated, and a major shout out to Dave Holland for being brave enough to be the lone male giving his view. If you are looking for a home in any of these areas, or know of someone moving to any of the areas these outstanding Agents are located in, please contact me to get their information. Also if you have questions about this or any other Real Estate related information, you can contact me as well. Thank you for reading and as always MAKE IT A GREAT DAY!

 

 

 

How Homebuyers Can Get An Edge This Spring

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When winter finally ends and the temperatures start rising, it’s a fair bet that the housing market will heat up and homebuyers will too.

After all, new-home construction is only a third of what it was in the pre-recession days of 2006, so it’s expected that demand will outstrip supply. Meanwhile, after housing prices have shot up over the past year – 11.3 percent, according to the S&P/Case-Shiller Home Price Index – prices have dropped by 1 percent in each of the last two months. If you are homebuyers thinking this spring is a good time to starting looking for a house, you are hardly alone. That, of course, is the problem. Your dream house, which might have been easy enough for you to grab a few years ago, is being eyed by other potential homebuyers.

“It’s a seller’s market,” says Dani Babb, a Newport Beach, Calif., real estate consultant, citing the low inventory levels.

So if you don’t want to lose your dream home, here are some strategies to give you an edge over the competition.

1. Get your financing lined up. You may not fear being turned down by the bank, but the seller doesn’t know that. The seller may also be in a hurry to hand you the keys.

“Perhaps the seller’s hot button is being able to close within 30 days or having flexibility in the closing date, which could be important if they, too, are purchasing a home but are unsure when it will close,” says Brian Koss, executive vice president of Mortgage Network in Danvers, Mass

So get preapproved – not prequalified.

How do you do that? Click Here

Getting prequalified means you give a lender a snapshot of your financial life, but there are no papers to sign and no credit check, which should tell you something.

Preapproval, on the other hand, “involves filling out a complete 1003 mortgage-application​ form and all documentation to show your assets and income, so there are no surprises down the line,” Koss says. “Since new mortgage industry regulations took effect earlier this year, there is a

greater chance that a technicality or change in a borrower’s profile will negate a loan preapproval that everyone thought was real. So a full validation and vetting of all details will protect you best.”

2. Try to find out why the seller is selling. Buying a house can be an emotional decision. Selling a house can be, too.

How do you find that out? Contact me for an Agent in your area.

“An emotional seller versus a nonemotional seller will react to different things,” Babb says. For instance, if you have sellers who raised their kids in the house and lived there for most of their lives, “they may want and appreciate a buyer who will do a lot of upkeep. Sending a personal letter through your agent or to the owner may give you a leg up over other offers, or at least help the seller counter your offer,” Babb says.

Babb adds that if you’re in an occupation that “often speaks to the hearts of people,” like a firefighter or teacher, make sure the seller knows what you do. It may not be fair to the other potential buyer who is an actuary, but he probably already mentioned to the seller that the guest bedroom would be a perfect home for his 97-year-old grandmother.

On the other hand, money talks. “If the seller is in foreclosure or behind on payments, the seller may want out quickly and want the highest chance of closing the home before foreclosure,” Babb says. “Usually a high down payment or all-cash buyer will speak to this seller even if the offered price is lower than someone who can close in 45 days.”

3. Be flexible. If you’re competing against other buyers, be as accommodating as possible, says Ron Throupe, a professor of real estate at the University of Denver’s Daniels College of Business.

“Forget putting in a clause that you have to sell your house first. In this market, you will lose,” Throupe says. “You have to be able to take on the risk of two homes for a short time if needed.”

Sheryl Hodor, an agent with Berkshire Hathaway HomeServices Florida Realty, agrees. “The buyer should feel comfortable making an offer with a quick closing, no mortgage contingency and a limited inspection time frame,” she says.

A mortgage contingency allows buyers to back out of the deal if they can’t get financing for the house. Sellers understandably don’t like mortgage contingencies – they don’t want to wave off potential buyers only to learn that their buyer can’t actually purchase the house.

4. Sweeten the deal. “It’s not uncommon to [offer] over the asking price in order to ensure your contract is the one accepted,” Hodor says.

How much more is up to you, but even another $500 might get your seller’s attention.

You could also consider waiving the appraisal. That means if the bank determines the house isn’t worth the purchase price you and the seller agreed to, and it won’t lend you all of the money to cover it, you’ll make up the difference – provided you have the funds, of course.

5. Be fast. This is a big decision you ideally don’t want to rush, but if you know you can afford the house and you love it and the neighborhood, then, yes, you probably should rush.

“In an age of instantaneous communication, minutes count and can make the difference between an accepted or rejected offer,” Hodor says. “Be prepared to use as much technology as possible, such as electronic signatures, in order to ensure immediate responses.”

6. Be bold. If you really want the house, don’t get too cute and make a lowball offer, thinking there will be a lot of negotiation. You should suggest something close to the price the homeowner is expecting, or risk your offer being ignored. And this isn’t the time to be petty – or cheap.

How do you do that? Hire a Real Estate Agent, contact me for one in your area.

“Don’t haggle over $1,000 on a $400,000 deal,” Throupe says.

7. Provide good customer service. Wait, isn’t that the seller’s job? You would hope so, but in a competitive market, it comes down to thinking of the homeowner as your customer. You’ll get his business (well, the house) if you’re personable, easy to work with and able to offer a good deal. Of course, you want to make sure you don’t offer the seller such an amazing deal that you hate yourself the day after closing. You want the welcome mat – what you don’t want is to be a doormat.

And that is all done through hiring a good Real Estate Agent.

Information provided by Geoff Williams U.S News & World Report

If you have any questions please feel free to contact me at jefferycarter54@gmail.com

How Much Do You Need To Earn To Buy A Home

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How much do need to earn to buy a home in U.S. major metro areas? A new study looked at 25 big cities across the country and determined the minimum salary you should earn to become a homeowner.

To buy a home, at least a median-priced house, homebuyers on a budget have it made in Cleveland compared with San Francisco and San Diego in terms of what they need to earn. How much less do they have to earn?

Try 83 percent less, according to a study of mortgage rates and median home prices in 25 cities by mortgage website HSH.com. You would need a salary of $115,510.06 in San Francisco to afford a median-priced home in that city, while to buy a home in Cleveland requires a salary of $19,435.17, according to HSH.

HSH looked at its own 30-year, fixed-rate mortgages and fourth-quarter median home prices from the National Association of Realtors. In their model, they used a 20 percent down payment. They did not account for the cost of taxes, insurance and other expenses to live in the home. HSH also did not look at debt, so their scenario demands good credit.

MONTHLY PAYMENT: $2,695.23. MORTGAGE RATE: 4.28 PERCENT
PHOTO: A tour boat travels under the Golden Gate Bridge as viewed from the Marin Headlands on Oct. 20, 2013, in San Francisco, Calif.
George Rose/Getty Images
1.
San Francisco
Salary: $115,510.06. House price: $682,410

MONTHLY PAYMENT: $1,903.31. MORTGAGE RATE: 4.37 PERCENT.
PHOTO: A view of the downtown skyline is seen from Harbor Island on July 31, 2013, in San Diego, Calif.
George Rose/Getty Images
2.
San Diego
Salary: $81,570.40. House price: $476,790.

MONTHLY PAYMENT: $1,682.96. MORTGAGE RATE: 4.34 PERCENT.
3.
Los Angeles
Salary: $72,126.90. House price: $423,900

MONTHLY PAYMENT: $1,543.90. MORTGAGE RATE: 4.38 PERCENT.
4.
New York City
Salary: $66,167.27. House price: $386,300.

MONTHLY PAYMENT: $1,485.71. MORTGAGE RATE: 4.39 PERCENT.
5.
Boston
Salary: $63,673.13. House price: $371,300.

MONTHLY PAYMENT: $1,465.56. MORTGAGE RATE: 4.35 PERCENT.
6.
Washington, D.C.
Salary: $62,809.63. House price: $368,000.

MONTHLY PAYMENT: $1,379.70. MORTGAGE RATE: 4.40 PERCENT.
7.
Seattle
Salary: $59,129.86. House price: $344,400.

MONTHLY PAYMENT: $1,122.86. MORTGAGE RATE: 4.43 PERCENT.
8.
Denver
Salary: $48,122.72. House price: $279,300.

MONTHLY PAYMENT: $1,070.36. MORTGAGE RATE: 4.39 PERCENT.
9.
Portland, Ore.
Salary: $45,872.78. House price: $267,500.

MONTHLY PAYMENT: $1,024.77. MORTGAGE RATE: 4.43 PERCENT.
10.
Miami
Salary: $43,918.66. House price: $254,900.

MONTHLY PAYMENT: $999.42. MORTGAGE RATE: 4.37 PERCENT.
11.
Sacramento
Salary: $42,832.20. House price: $250,360.

MONTHLY PAYMENT: $960.29. MORTGAGE RATE: 4.33 PERCENT.
12.
Baltimore
Salary: $41,155.40. House price: $241,700.

MONTHLY PAYMENT: $859.52. MORTGAGE RATE: 4.41 PERCENT.
13.
Philadelphia
Salary: $36,836.47. House price: $214,300.

MONTHLY PAYMENT: $788.67. MORTGAGE RATE: 4.39 PERCENT.
14.
Minneapolis
Salary: $33,800.09. House price: $197,100.

MONTHLY PAYMENT: $765.61. MORTGAGE RATE: 4.33 PERCENT.
15.
Phoenix
Salary: $32,811.94. House price: $192,700.

MONTHLY PAYMENT: $755.74. MORTGAGE RATE: 4.47 PERCENT.
16.
Chicago
Salary: $32,388.90. House price: $187,100.

MONTHLY PAYMENT: $730.31. MORTGAGE RATE: 4.40 PERCENT.
17.
Houston
Salary: $31,298.99. House price: $182,300.

MONTHLY PAYMENT: $694.20. MORTGAGE RATE: 4.37.
18.
Dallas
Salary: $29,751.24. House price: $29,751.24.

MONTHLY PAYMENT: $683.79. MORTGAGE RATE: 4.35 PERCENT.
19.
San Antonio
Salary: $29,305.47. House price: $171,700.

MONTHLY PAYMENT: $660.30. MORTGAGE RATE: 4.35 PERCENT.
20.
Orlando
Salary: $28,298.47. House price: $165,800.

MONTHLY PAYMENT: $575.19. MORTGAGE RATE: 4.47 PERCENT.
21.
Tampa
Salary: $24,650.88. House price: $142,400.

MONTHLY PAYMENT: $569.12. MORTGAGE RATE: 4.38 PERCENT.
22.
Atlanta
Salary: $24,390.94. House price: $142,400.

MONTHLY PAYMENT: $522.61. MORTGAGE RATE: 4.41 PERCENT.
23.
St. Louis
Salary: $22,397.54. House price: $130,300.

MONTHLY PAYMENT: $518.63. MORTGAGE RATE: 4.45 PERCENT.
24.
Cincinnati
Salary: $22,226.95. House price: $128,700.

MONTHLY PAYMENT: $453.49. MORTGAGE RATE: 4.43 PERCENT.
25.
Cleveland
Salary: $19,435.17. House price: $112,800

Real Estate Agents Love Their Toys

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Real Estate Agents really do love their toys. No, it’s not what you think. One could say that the automobile is an essential tool to any real estate pro. In fact, most of the Real Estate Agents that I know and work with spend just as much time (if not more) driving to appointments and homes as they do in the actual home.

Thanks to Environmental Protection Agency regulations, every vehicle sold in the U.S. since 1996 includes an onboard diagnostic system that can be accessed using a data port. “OBD” systems help auto mechanics by self-diagnosing and reporting problems that can make the car’s engine run less efficiently or shorten its life. But there are a bunch of new and exciting products hitting the market that leverage this technology for other purposes, turning your vehicle into a smart connected car.

How does it work?

You simply connect your phone to your car. A Bluetooth-enabled device is inserted into the vehicle’s OBD data port, which is typically located under the steering wheel. The device is then paired with your smartphone via Bluetooth, enabling data to be synced. No mechanic is required, and the app does the rest.

What type of data will be reported to me?

The mobile apps essentially act as a driving assistant and produce a ton of insightful data. For instance, a smart connected car can decipher the nebulous and dreaded check engine light, revealing detailed information about the issue and an estimate of the potential cost of repair, which is pretty cool.

The smart connected car can provide mileage information, mapping, parking details and even maintenance management.”
There is other valuable data that can be helpful to Realtors as well. The smart connected car can provide mileage information, mapping, parking details and even maintenance management.

What’s the value proposition?

The selling point for these connected apps is safety and savings. Fuel is the largest motor vehicle expense, and tapping into your OBD system can help you monitor your gas levels and report back the best time and place to refuel to take advantage of the best price.

The apps also include some form of crash reporting. So, if you are ever in an accident, the proper authorities are automatically contacted and GPS coordinates will be delivered.

There is a plethora of new products, startups and Kickstarter campaigns seeking funding to gain traction in this space. Many of these apps have similar features and configurations. It will be interesting to see how the companies differentiate themselves and try to separate from the pack.

I’ve looked at a bunch of these services, researching them and doing some due diligence. Here are three apps that are ready to transform the way Real Estate Agents drive.

1. Dash

Features: Dash boasts three primary features: safety, savings and interestingly enough, social. Their brand is executed nicely on the Web, communicating simplicity and ease of use, which will be important with a product in this space.

The safety and savings elements are pretty standard; however, the social integration is pretty interesting. You can compare how you drive to your friends and unlock digital bumper stickers.

Unlike some of their competitors, Dash offers an API for developers. On its website, the company says, “Dash is building the ‘Automotive Graph’ — an open platform for the road, enabling smarter driving for everyone. Dash has an API available for third party developers. We call it CHASSIS API.”

Mobile Support: Dash currently supports Android, with iOS coming soon.

Price: I like the fact that Dash offers two Bluetooth-enabled devices. A generic one for $10 and a proprietary one $69.

You can learn more here.

2. Automatic

Features: Like Dash, Automatic is available now and sports a polished brand and elegant website. It has similar safety and cost-saving features. The app also records your parking location automatically, which can be retrieved later. A nice feature if you ever have lost your car in a mall parking garage or large stadium. The feature includes support for multiple drivers as well.

Trip Timeline is another feature Realtors will enjoy. As the company puts it on its the website, “The Automatic app displays detailed info about your week, like how much you drive and where. See the actual MPGs (miles per gallon) for all your trips, even for older cars that don’t display fuel efficiency on the dashboard.”

Mobile Support: Automatic works with iOS and is in beta for Android.

Price: $99.95

You can learn more here.

3. Fuse

Features: Fuse successfully funded its Kickstarter project on Nov. 15, raising almost $20,000 more than their goal. The platform is currently available for preorder and should be ready for shipping in March.

Fuse has an interesting carpool feature. On its website the company promises you’ll be able to “start your carpool route with a simple tap and the people you’re picking up get a text or phone call letting them know you’re on your way. As you approach their house they get another text or phone call, letting them know you’re about there. All the while you’re focused on driving, not texting or calling.”

Mobile: Fuse supports iOS and Android.

Price: If you preorder Fuse now, it’s $40 off the list price — $159 (regularly $199).

Information provided by Tom Flanagan.

 

Real Estate Agents Top 5 Tax Breaks

Well Real Estate Agents we have reached that that again. The time where Uncle Sam asks where is my money?

Uncle Sam

 

Although it’s not the most fun—or even something we look forward to—it’s a necessary evil. On the up side, unlike other professionals, real estate agents are lucky in that they have a lot that they can write off. In order to be able to do so, however, it’s important you have the correct documentation, so start sifting away!

Below is our list of the top five tax breaks for Real Estate Agents. Start getting your paperwork in order now to make tax season 2014 a breeze!

Deduct Car Expenses

Flinstone Car

Being Real Estate Agents means driving around to meet with a lot of clients, show a lot of listings, host a lot of open houses, etc. Therefore, why don’t you start by writing off your mileage? Start keeping track of your mileage by writing down your miles driven from your odometer every time you hit the gas station. You can keep this record in a hand-written file, on your phone or on your computer as an excel spreadsheet. In 2014, the standard mileage rate is 56 cents per mile. However, before you start calculating your write-off, make sure to deduct the miles driven commuting to and from your home to work.

Furthermore, according to the IRS’ website, “Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.” This would include spending for gas, repairs, oil, car washes, etc. Make sure to obtain third party documents for all services, even your mileage, which can be procured after getting an oil change.

Aside from mileage and maintenance, if you’ve recently purchased a new car, you may be able to write it off under Section 179. Keep in mind that there is a weight limit on the vehicle and a dollar limit on how much of the purchase price you can write off. The IRS states, “You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets…” However, this is for a vehicle weighing more than 6,000 pounds (the average car weighs 4,000 lbs). Land Rover dealership, here we come!

Deduct Office Expenses

9-30-13 colorful home office

If you work out of a business office, for example, a broker’s office that you own, you can deduct the cost of rent and utilities. Some expenses are considered current, meaning they will be deducted in the year that they are paid, whereas others are labeled capitalized and are depreciated or spread out over time.

When it comes to a home office, things get a bit trickier. According to IRS Topic 509, requirements to be considered a home office include an area that is used:

1. Exclusively and regularly as your principal place of business for your trade or business
2. Exclusively and regularly as a place where you meet and deal with your patients, clients, or customers in the normal course of your trade or business; or
3. A separate structure used exclusively and regularly in connection with your trade or business that is not attached to your home
4. On a regular basis for certain storage use
5. For rental use
6. As a daycare facility

While the latter two options really don’t apply, it’s important to pay careful attention to the first four. Note the word “exclusively.” This means that you can’t use the room for any other purpose, even after hours. Another important thing to note: the home office doesn’t have to be a full room; it can be a part of a room, as long as it’s clear that it’s used as a business space.

How much you can write off depends on the ratio of home office size to home size. You can use IRS Form 8829 to calculate home office write offs by percentage of square feet or by number of rooms. Once you have this number, apply it to your home office expenses to see how much you can deduct. Another option, available as of 2013, is to take a standard deduction of $5 per square foot of office space, up to 300 square feet, the maximum deduction being $1,500.

For home owners, home office expenses include mortgage interest, real estate taxes, homeowners insurance, cleaning expenses, maintenance, an alarm system, casualty losses, property tax, utilities and repairs. Furthermore, homeowners can depreciate a portion of the cost of their house.

If you’re a renter, great news! A portion of your monthly rent can be written off.

Now, what happens if you work at both your home office and your broker’s office? As long as your home office still qualifies as your “principal place of business,” you still qualify for the write off. How do you determine if it’s “principal”? In Publication 587, the IRS states that you must consider “The relative importance of the activities performed at each place where you conduct business and the amount of time spent at each place where you conduct business.” Basically, where you conduct important activities and spend the most time is your principal place of business. What they mean by “important activities” is “administrative or management activities,” which include:

• Billing customers, clients, or patients
• Keeping books and records
• Ordering supplies
• Setting up appointments
• Forwarding orders or writing reports

Deduct Business Travel and Entertainment

deduct business travel 250x250 Top 5 Tax Breaks for Real Estate AgentsIf you’ve travelled for real estate business this year, whether to attend a conference or meet with an out of town client, you can write off your transportation and lodging expenses. When it comes to food, however, you can only deduct 50 percent of the cost of meals.

Entertaining a client on the road or in your home town? If you’d like to deduct the cost of a meal or an entertainment event, the entertainment must take place “directly before or after a substantial business discussion.” The IRS Publication 463 elaborates by stating that as long as the entertainment takes place on the same day as said discussion, it’s considered to be held directly before or after (why didn’t they just say that in the first place?). Like business travel meals, only 50 percent of the cost of the meal or “entertainment” can be deducted.

Deduct Professional Services

Many agents outsource business, whether it’s to freelance writers, attorneys, marketing agencies, accountants, photographers, consultants, graphic artists, SEO specialists or web designers. Fees that you pay to these professionals for work related to your real estate business can be written off. Check out the IRS Publication 535 for more information.

Deduct Insurance

Business liability insurance, insurance for business property or any insurance bought exclusively for your real estate business is deductible. As mentioned before, you can deduct a portion of your homeowners insurance if you work out of a home office. Additionally, according to an IRS Tax Tip, if you are self-employed, you are allowed a 100 percent deduction of all “medical, dental or long-term care insurance premiums.”

 

Feeling a bit more prepared to take on the 2014 tax season? We hope this breakdown of the top five tax breaks for real estate agents was helpful, and wish you the biggest refund yet!

information provided by Lolly Spindler

If you have any questions regarding getting your clients pre-approved or help with Real Estate Strategies, contact me at jefferycarter54@gmail.com or 785-261-9509.

 

Buying A Home In Six Easy Steps-Jeff’s Comical Version

Buying a home should be a great experience for everyone. Most people have truly loved their process in buying a home. However, sometimes it is quite the interesting experience. I am going to give you my comedic take in the steps in buying a home, and I hope you certainly enjoy it. Remember this is just a spoof and nothing more.

Step One- Real Estate Agent introduces herself

Passed real estate exam1

 

Step Two- Expressing what you want in a home to your Agent

explaining to agent

 

 

Step Three- Found out you were pre-approved

 

just got pre-approved

 

 

Step Four- Tell your child you are moving

telling your kids you are moving

 

and your other child!

telling your kids you are moving2

 

 

Step Five- Tell off people that said you couldn’t do it.

haters

 

Step Six- Celebrate after leaving closing table!

just left closing table

 

what the heck…add some friends!

friends celebrating

 

Well there you have it the six steps to buying a home Jeff style. I hope you enjoyed it. If you have any questions regarding mortgages and getting pre-approved, please feel free to contact me at jefferycarter54@gmail.com or 785-261-9509. If you are an Agent and looking for strategies to help increase your business, contact me as well.

Using Facebook To Win Your Next Listing Appointment

This is the next class in our Agent Mastermind series. We will be showing Real Estate Agents from across the country how to gain listings from sellers on Facebook. These classes are designed to assist Real Estate Agents to increase their business. If you haven’t been apart of this great series, now is the time to do so! We are dedicated to the success of Real Estate Agents and 2014 is heating up! Let’s Do This!!!!!

Is Someone Calling Your Database- AMM 2014

The first webinar for 2014 with Agent Mastermind. This is a continuation from our last class with Carl White. He has some great strategies for this webinar, so don’t miss out!!!!!!

 

The Power of Positive Thinking- Video Tip of the Week

In this day and age we all have a tendency to say and do things that are not even noticed. This video let’s you take a look at those things and hopefully help you to change the way you think and speak!

Managing Your Social Media in 10 Minutes A Day

I teach Real Estate Agents how to increase their business through tips, tools and strategies. Some of those strategies involve utilizing Social Media for their business. You would not believe how often they ask if they need multiple Social media sites and how often do they need to post and engage on the sites. This video will give you a little insight as to what we are going to show on Tuesday’s class. Check it out!!!!