What is Real Estate Tax in “ObamaCare?”

1. It is not a tax on all properties. It is a tax on SOME investment income from interest, dividends, rents and capital gains.
2. It is not a tax on all people. Only individuals with an Adjusted Gross Income of $200,000 and couples with AGI over $250,000 will be included.
3. It is part of Health Care reform.
4. It is not a transfer tax, it is an income tax on investment income.
5. It does not affect the capital gain exclusions on the sale of a principal residence.Currently the first $250,000 of gain for a single person and $500,000 on a married couple is exempt from capital gains. The tax does, however, apply on amounts over the exemption.
6. What real estate does it apply to? For those taxpayers whose AGI is above the limits , the sale of a principal residence when the gain is over and above the exempt amounts, the sale of second homes and invest property and the income derived from investment property.
7. There is a separate tax for high wage and self employment business income.When investment property income qualifies as business income and not property earnings, the 3.8% does not apply, however a new tax of .9% is due.
EXAMPLE
Capital Gain: Sale of a Principal Residence
John and Mary sold their principal residence and realized a gain of $525,000. They have $325,000 Adjusted Gross Income (before adding taxable gain).
Example Chart
If John and Mary had a gain of less than $500,000 on the sale of their residence, none of that gain would be subject to the 3.8% tax. Whether they paid the 3.8% tax would depend on the other components of their $325,000 AGI.
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Trends in Home Improvement

If you are thinking of tackling a home improvement project or are buying a home and looking to renovate, here are some of the latest trends in remodeling.

Floors – Carpet, linoleum and even ceramic tile floors are being replaced by wood flooring.

  Countertops – Laminate countertops are making a comeback versus granite.  The latest European-inspired laminate counters that offer high definition texture and natural finishes are often preferred. 

Bathroom Fixtures – Bronze is the preference for bathroom fixtures such as faucets, towel bars, and shower heads. 

Paint – Flashy paint colors are out and warm colors and earth tones are in.  Homeowners are adding color with accessories instead of painting the walls bright colors. 

Outdoor Living Spaces – This is not a new trend, but is becoming more popular.  Adding an outdoor space such as a patio or deck makes the house look and feel larger. 

Green and Energy Efficient – Environment-friendly  and energy saving features include upgrading the HVAC system, windows and doors and adding more insulation as well as radiant heating, geothermal heating and solar heating. 

Top 10 Agent Protocol Tips – Rules for Working With Agents

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Here are protocols you can use while shopping for a home that will keep you out of hot water:

1. Understand Agents Work on Commission

  • Very few real estate agents work on salary.
  • Most real estate agents are paid commission. If an agent does not close a transaction, she does not get paid.
  • Agents are not public servants and do not work for free. Do not ask an agent to work for you if you intend to cut the agent out of your deal.
2. Keep Appointments & Be On Time
  • Be respectful, use common courtesy and don’t expect an agent to drop what she is doing to run out to show you a home. You are probably not that agent’s only prospect / client. And if you are, lord help you.
  • Do not make an appointment with an agent and then forget to show up.
  • If you are going to be late, call and let your agent know when you expect to arrive.

3. Choose A Real Estate Agent

  • Decide whether you want to work without representation: dealing directly with listing agents, or if you want to hire your own agent.
  • If you decide to hire your own agent, find an agent with whom you are comfortable.
  • If you are interviewing agents, let each agent know you are in the interview stage.
  • Never, never, never interview two different agents from the same company. Trust me, don’t do it.

4. Do Not Call The Listing Agent if You Are Working With a Buying Agent

  • Listing agents work for the seller, not the buyer. If you hire the listing agent to represent you, that agent will now be working under dual agency.
  • If listing agents show you the property, the listing agent will expect to represent you.
  • Listing agents do not want to do the buying agent’s job. Let your buyer’s agent do her job.

5. Practice Open House Protocol

  • Ask your agent if it’s considered proper for you to attend open houses alone. In some areas, it is frowned upon to go to open houses unescorted.
  • Hand your agent’s business card to the agent hosting the open house. Sometimes this agent will be the listing agent, but often it is an agent also looking for unrepresented buyers. Announcing you are represented protects you.
  • Do not ask the open house host questions about the seller or the seller’s motivation. Let your agent ask those questions for you.

6. Sign a Buyer’s Broker Agreement with a Buying Agent

  • Expect to sign a buyer’s broker agreement. It creates a relationship between you and the agent, and explains the agent’s duties to you and vice versa.
  • Ask about the difference between an Exclusive and Non-Exclusive Buyer’s Broker Agreement.
  • If you’re not ready to sign a buyer’s broker, do not ask that agent to show you homes. Otherwise, procuring causemay pop up.
  • Ask your agent if she will release you from the contract if you become dissatisfied. If she refuses, hire somebody else.

7. Always Ask For and Sign an Agency Agreement

  • By law, agents are required to give buyers an Agency Disclosure.
  • Signing an agency disclosure is your proof of receipt. It is solely a disclosure. It is not an agreement to agency. Read it.
  • The best and most practiced type of agency is the single agency. This mean you are represented by your own agent who owes you a fiduciary responsibility.

8. Make Your Expectations Known

  • If you expect your agent to pick you up at your front door and drive you home after showing homes, tell her. Many will provide that service. If not, they will ask you to meet at the office.
  • Let your agent know how you want her to communicate with you and how often. Do you want phone calls, e-mails, text messages, IM‘s or all of the above?
  • Set realistic goals and a time frame to find your home. Ask your agent how you can help by supplying feedback.
  • If you are displeased, say so.

 

Biggest Mistakes Buyers Make in a Hot Seller’s Market

In the current seller’s market that exists in many parts of the country, buyers need to perform near perfectly to attain the home of their dreams. Many of the best new listings that come to market are receiving multiple offers . . . and in just a few days on the market. So what can you do as a buyer to enhance your odds of getting your offer accepted?

1)      Get Serious and Work with a Real Estate Agent – while this sounds like a given, many buyers are casually looking and only get serious when they see a home on the internet and start their quest to buy that home from whatever agent they can find. By the time they get mobilized the home is gone!  Here in the Destin, and most of the Northwest Florida market, many homes that are terrific deals have multiple offers almost immediately after going on the market.

2)      Get Ready to Buy – There are great local lenders here in Destin, Niceville, Fort Walton Beach, Crestview, and Navarre markets – be sure to get prequalified or better yet preapproved for your loan. This eliminates any surprises and demonstrates to sellers that you are serious, qualified, and able to close. Have your proof of funds ready to show which is often required.  Especially if you find a foreclosure, they will want this proof of funds to come with the offer.

3)      Operate with a Sense of Urgency – Have your real estate agent set you up a new listings alert and when a hot property comes to market moving quickly is extremely important. If a listing comes to market on a Wednesday, waiting until Saturday to see it because you want to watch TV won’t work. Always assume that other interested buyers are seeing the home on day 1 and making an offer on day 1!

4)      Make Clean Offers – offers that are not clean result in delays and counter offers– delays results in more buyer offers – multiple offers drive prices up and probability of getting your dream home down. If there is something specific that the seller is looking for in your offer do everything possible to accommodate it.

Why Hire A Real Estate Agent?

The typical real estate transaction involves at least two dozen separate individuals – insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer’s agents, seller’s agents, bankers, title researchers, and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.

Seven main roles of your real estate agent
A Buyer’s Real Estate Agent:

  1. Educates you about your market.
  2. Analyzes your wants and needs.
  3. Guides you to homes that fit your criteria.
  4. Coordinates the work of other needed professionals.
  5. Negotiates on your behalf.
  6. Checks and double-checks paperwork and deadlines.
  7. Solves any problems that may arise.

Home Improvements for $100 or Less

Tip 1: Spend an hour with a pro.

Invite a Realtor or interior designer over to check out your home. Many Realtors will do this as a courtesy, but you will probably have to pay a consultation fee to a designer. Check with several designers in your area — a standard hourly fee is normally less than $100.

In an hour, a professional can give you lots of ideas for needed improvements. Even small suggestions, such as paint colors or furniture placement, can go a long way toward improving the look and feel of your home.

Tip 2: Find inspiration.

Want an even cheaper alternative to a professional consultation? Search for remodeling and decorating inspiration in design-oriented magazines, books, TV shows and Web sites. Simply tear out or print off the ideas you want to try and start your to-do list. Keep it simple: when remodeling on a tight budget, do-it-yourself type projects are best.

Tip 3: Inspect it!

Not every home improvement is cosmetic. Hidden problems like deteriorating roofs, termite infestation or outdated electrical systems can negatively impact your home’s value. Hire an inspectorto check out the areas of your home that you don’t normally see. Small problems, like a hidden water leak, can become expensive headaches if you put off repairs. A little investment now can save you loads of cash later.

Tip 4: Paint, paint, paint.

One of the simplest, most cost-effective improvementsof all is a fresh coat of paint. Newly painted rooms look clean and updated — and that spells value. Neutral paint colors appeal to the greatest number of people, therefore making your home more desirable. On average, a gallon of paint costs around $25, leaving you plenty of money to buy rollers, tape, drop cloths and brushes. So, buy a few gallons and get busy!

Tip 5: Cut energy costs.

If you think your utility bill is a fixed amount, call your local utility company to find out. Many energy providers offer free energy audits of their customers’ homes. They can show you how to maximize the energy efficiency of your home. A power- and water-saving home will conserve your money now, and is more valuable in the long run. Plus, you can use the money you save for more updates!

Top 10 Reasons to Hire a Real Estate Agent

1. Education & Experience

You don’t need to know everything about buying and selling real estate if you hire a real estate professional who does. Henry Ford once said that when you hire people who are smarter than you are, it proves you are smarter than they are. The trick is to find the right person. For the most part, they all cost about the same. Why not hire a person with more education and experience than you? We’re all looking for more precious time in our lives, and hiring pros gives us that time.
2. Agents are Buffers
Agents take the spam out of your property showings and visits. If you’re a buyer of new homes, your agent will whip out her sword and keep the builder’s agents at bay, preventing them from biting or nipping at your heels. If you’re a seller, your agent will filter all those phone calls that lead to nowhere from lookie loos and try to induce serious buyers to immediately write an offer.

3. Neighborhood Knowledge

Agents either possess intimate knowledge or they know where to find the industry buzz about your neighborhood. They can identify comparable sales and hand these facts to you, in addition to pointing you in the direction where you can find more data on schools, crime or demographics. For example, you may know that a home down the street was on the market for $350,000, but an agent will know it had upgrades and sold at $285,000 after 65 days on the market and after twice falling out of escrow.

4. Price Guidance

Contrary to what some people believe, agents do not select prices for sellers or buyers. However, an agent will help to guide clients to make the right choices for themselves. If a listing is at 7%, for example, an agent has a 7% vested interest in the sale, but the client has a 93% interest. Selling agents will ask buyers to weigh all the data supplied to them and to choose a price. Then based on market supply, demand and the conditions, the agent will devise a negotiation strategy.

5. Market Conditions Information

Real estate agents can disclose market conditions, which will govern your selling or buying process. Many factors determine how you will proceed. Data such as the average per square foot cost of similar homes, median and average sales prices, average days on market and ratios of list-to-sold prices, among other criteria, will have a huge bearing on what you ultimately decide to do.

6. Professional Networking

Real estate agents network with other professionals, many of whom provide services that you will need to buy or sell. Due to legal liability, many agents will hesitate to recommend a certain individual or company over another, but they do know which vendors have a reputation for efficiency, competency and competitive pricing. Agents can, however, give you a list of references with whom they have worked and provide background information to help you make a wise selection.

7. Negotiation Skills & Confidentiality

Top producing agents negotiate well because, unlike most buyers and sellers, they can remove themselves from the emotional aspects of the transaction and because they are skilled. It’s part of their job description. Good agents are not messengers, delivering buyer’s offers to sellers and vice versa. They are professionals who are trained to present their client’s case in the best light and agree to hold client information confidential from competing interests.

8. Handling Volumes of Paperwork

One-page deposit receipts were prevalent in the early 1970s. Today’s purchase agreements run 10 pages or more. That does not include the federal- and state-mandated disclosures nor disclosures dictated by local custom. Most real estate files average thicknesses from one to three inches of paper. One tiny mistake or omission could land you in court or cost you thousands. In some states, lawyers handle the disclosures, thank goodness!

9. Answer Questions After Closing
Even the smoothest transactions that close without complications can come back to haunt. For example, taxing authorities that collect property tax assessments, doc stamps or transfer tax can fall months behind and mix up invoices, but one call to your agent can straighten out the confusion. Many questions can pop up that were overlooked in the excitement of closing. Good agents stand by ready to assist. Worthy and honest agents don’t leave you in the dust to fend for yourself.

10. Develop Relationships for Future Business

The basis for an agent’s success and continued career in real estate is referrals. Few agents would survive if their livelihood was dependent on consistently drumming up new business. This emphasis gives agents strong incentives to make certain clients are happy and satisfied. It also means that an agent who stays in the business will be there for you when you need to hire an agent again. Many will periodically mail market updates to you to keep you informed and to stay in touch.

Top 10 Things to Sell Your House

Repaint Rooms. Paint with a buyer’s sensibilities in mind.

Wash and Paint the Exterior. Repainting your exterior increases curb appeal

Shine with New Lighting. Bring out the best features of your house with a new lighting layout.

Organize and De-Personalize. Cleanliness leads to closing.

Repair or Replace Window Screens. Fixing sagging, dirty or ripped screens is one of the easiest and most inexpensive home improvements for home sellers

Patch Drywall Dings and Dents Imperfections like drywall divots suggest larger problems with the integrity of your house.

Unstick Stubborn Doors. Sticking doors are bothersome, and even more so to prospective buyers touring your home for the first time

Repair Tile Grout. Make your bath and kitchen look brand new by ridding these rooms of shabby and damaged grout

Upgrade Kitchen and Bath Faucets. Replace faucets to give your kitchen or bathroom a quick facelift.

Clean Your Gutters. Clogged gutters could make a great house look neglected

 

Homebuyer Interest in Foreclosures

The stigma associated with foreclosure purchases has apparently faded, with interest in foreclosures nearly tripling in the past two years, according to a survey released Wednesday by Realtor.com

The survey, conducted over 1,004 phone interviews at the beginning of May, suggested that homebuyer interest in foreclosures has jumped 159 percent since October 2009, when foreclosures made up 29 percent of all home sales. Nearly two-thirds (64.9 percent) of homebuyers surveyed said they’re likely to purchase a foreclosure, a huge increase from 25.3 percent two and a half years ago. The vast majority of buyers said they would want to live in their foreclosure purchase, with 92.1 percent looking for a home to live in and only 6.9 percent looking for foreclosure investments. “We see a combination of factors coming into play explaining the unexpected interest in foreclosures,” said Steve Berkowitz, CEO of Realtor.com operator Move, Inc. “Reductions in supply, expectations that home prices will rise, and changing attitudes towards foreclosures are contributing to the increased, especially among owner-occupants. As lenders begin processing their distressed inventories and releasing them for sale at the local level, we look to them to move carefully and monitor conditions so recently gained home values aren’t diminished

Mortgage Fraud

While mortgage originations are at their lowest level since 2001, investigations for mortgage fraud have shot up in recent years. As of December 31, 2011, the FBI reported 2,590 pending mortgage fraud investigations with 71 percent involving losses of more than $1 million.  Source:FBI

In 2007, there were 1,199 pending fraud causes, with a peak of 3,129 in 2010, according to an FBI financial crimes report. With increased levels of foreclosures and delinquencies over the past few years, mortgage fraud schemes targeting distressed homeowners as victims have surged as well.

In addition to mortgage fraud cases, mortgage fraud suspicious activity reports (SARs) saw a significant increase, with 46,717 reports in 2007, and 93,508 in 2011.

Through the year 2011, FBI mortgage fraud investigations led to 1,220 informations and indictments and 1,089 convictions. The uncovering of mortgage fraud cases brought $1.38 billion in restitutions; $116.3 million in fines; seizures valued at $15.7 million; and $7.33 million in forfeitures, according to the FBI report.

States with significant mortgage fraud problems in 2010 were Florida, New York, California, New Jersey, Maryland, Michigan, Virginia, Ohio, Colorado, and Illinois, according to Mortgage Asset Research Institute.

The FBI advises homeowners to be aware of offers which claim to save borrowers in distress and also advises against paying advances fees for promised services in return.

One type of mortgage fraud scheme involves scammers claiming they can negotiate loan modification terms on behalf of the borrowers with the lender while demanding large fees up front for the service they are purporting to offer.