Notes on Real Estate 
Notes on Real Estate
April 6th, closed on a purchase of a townhome in Bloomington – April 29th, closed on a listing, 2948 Knox N – May 6th, listed a $405,900 split level in Minnetonka – May 8th, received and accepted an offer on a listing at 4848 6th Street N - Have an investor moving strongly forward with serious consideration of making a purchase – a whole herd of other developing action in progress.
Things are looking good in the market, both for buyers and sellers. I sort of predicted this would happen a while back. (He said, taking a slight bow.) In our neck of the woods, the correction from overly priced homes and a seller’s market is in progress. No “bubble” is bursting here, nor do I think it will. We are seeing overly priced homes come down considerably, and we are seeing lower-priced homes selling to people who know the value of building equity rather than renting.
I just saw an offer where the buyer was willing to take a conventional loan at 30% fixed at 11%. Circumstances being “right”, I’d recommend that to any buyer whose debt-to-income ratio and credit score required it, so long as the gain in equity beat the cost of renting for fairly similar dollars.
I predict a stable and buyer and seller friendly market for the next couple of years. Obviously, unforeseen events of magnitude can cause significant variations, but real estate will still weather those storms better than other investments. That’s my prediction.
(April 25, 2005) -- The U.S. tax code has a huge number of deductions and credits, and real estate related ones top the list in lost revenue to the federal government, says President Bush's Advisory Panel on Federal Tax Reform.
The group has ranked the deductions by cost, with mortgage-interest deductions, capital-gains exemptions, and property tax breaks heading the list at $76 billion, $36.3 billion, and $14.8 billion, respectively.
"It wasn't until we really had the opportunity to listen to so many different people talk about so many different aspects of the code that it really sunk in about how much and how often the code is being used these days to either create incentives or disincentives for either investment or behavior," explains former Florida Sen. Connie Mack, who chairs the presidential commission.
Urban-Brookings Tax Policy Center co-director Eugene Steuerle acknowledges that tax breaks eliminate the
need for additional government spending, but he contends that they prevent lawmakers from slashing
income-tax rates.”
Source: Philadelphia Inquirer (04/25/05); Dalrymple, Mary
Beware the federal government and its greed. State government can be worthy of a caution, as well. It seems that some legislators determine what to do next by asking two questions:
They forget to ask whether messing with and taking money from such sources might also endanger the pillars that are shoring up the economy’s foundation.
The U.S. Justice Department is preparing to sue the National Association of Realtors over policies the federal agency believes will illegally restrict competition and harm online competitors, the Wall Street Journal reported today.
The Justice Department is expected to charge that NAR, in its pending bylaw governing virtual office Web sites, illegally adopted policies that aim to restrict Internet-based competition and discount brokers, according to the Wall Street Journal report, which cites lawyers close to the case.
The NAR rule, which is expected to take effect in July, would enable broker members to withhold property listings from online brokers. The date of implementation for the rule has been delayed several times since the association first adopted in nearly two years ago.
NAR is the largest trade association for real estate companies and agents, and has more than 1 million members.
In May 2003, NAR adopted a policy to govern how brokers could display each other's for-sale listings on virtual office Web sites, or VOWs.
The Justice Department's investigation of the policy, which opened in late 2003, has focused on a provision of NAR's policy that permits brokers to opt out listings from other brokers' VOWs on a blanket or selective basis, according to NAR's legal department. The Department also has been interested in a provision that restricts the use of names and contact information collected through a VOW in connection with referrals of business to companies other than real estate brokers.
The Multiple Listing Service and the information that goes into it is proprietary to its members and the Realtors who are doing the listings. Now, discount brokers are endeavoring to guarantee themselves a free entrée into this valuable source of information. Back a long time ago (pre-Internet), listing were provided by constantly updated MLS books, huge, voluminous monstrosities, and they were the exclusive province of Brokerages and their Realtors. Once they were on the internet, those who are scavengering the territory, have decided the information should be as public as the Internet itself.
When I list a property and take the pictures, gather the information, and assemble it for the MLS listing, it’s not the property of a VOW.
I’m all for competition. Let’s just keep it honest. This is all about the discount broker versus the regular broker. The discount broker wants to use the full-service broker’s MLS for free, arguing some sort of “entitlement” to it because it’s Internet based. In truth, a discount broker also “discounts” the amount and often the quality of service provided. Often, the service provided actually becomes the added burden put upon the buyer’s agent/broker to carry a ball the discount listing brokerage won’t and can’t carry at the rates it’s offering. On top of this, they want to use MLS service that wasn’t truly theirs in the first place. They are counting on people saying or thinking, “Realtors make too much money in the first place, and have a monopoly on the business, and now they are trying to strangle hold the discount brokers.” Nope. Fees are always negotiable; it’s just a question of who is willing to work for their money.
The NAR is much more about professional ethics, fair trade practices and honest client/broker relationships than it is about restricting trade or charging high fees without competition.
When big government (and isn’t it all, regardless of party?) wants to stick their nose in, my first reaction is to get nervous. What about you?
If you aren’t getting my Investor’s Express, and you think you might have an interest in using the power of real estate to either buy, fix and sell – or own and rent out an income property, let me know.
If you know someone who is interested in selling or buying a home, moving up or moving along, please refer them to me. Or, have them check out my web page. Thanks.
That’s it for now. Except this:
1. If you have interests or questions, please e-mail me or give me a call.
2. Check out my website HERE
The opinions expressed in this newsletter are solely those of Tom Crone and others being quoted and do not necessarily reflect the opinions of Coldwell Banker Burnet or its affiliates.
