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Posted on June 28, 2016 |

rookie-pic (1)Today I’m sharing an article originally posted on REM written by Joanna Dermenjian. This article explains the reality for new Realtors just starting out and the demands for any agent who wants to be successful in their new career. Enjoy!

Joanna writes:

You’ve passed your exam, signed on with a brokerage and received your license. Now, where is the instruction manual on how to be a real estate professional? There isn’t one! It’s Day 1 in your new career and you have no idea what to do, what to expect and how to get started. Here is what we have learned that you need to know:

Your first year will be very hard. If you make it through the first year and do 10 transactions, you have a chance to gain enough momentum to build a career in real estate. In the first 100 days, you need to gain traction. The clock is ticking, and the first 100 days are counting down. Get yourself one firm transaction and at least two more buyers you have already started working with in that first 100 days. There needs to be urgency in everything you do.

1. You are now a brand.

You are being watched – when you are out with friends, when you are eating in a restaurant, when you are shopping at a retailer or are receiving a service. Everywhere you go, people will start to know who are. They will watch you and listen to what you say and how you say it, even if you aren’t talking to them. Think about that.

2. You are a professional.

You want to be a very successful professional. Dress for the job. Arrive on time. Clean your car. Be organized. Be well groomed and presentable all the time, even in your leisure time. Behave.

3. You are a salesperson.

The public perception is that we sell houses, but truly we are selling ourselves. Our knowledge, our expertise, our competence. You don’t have those yet, so you have to work very hard to get them quickly. Until then, sell yourself as enthusiastic, hardworking, ethical and available, with support from a great brokerage and colleagues when you need assistance.

4. You are now a business.

Project your expenses for the year and your net if you do five sales in the first year, at the average residential selling price in your board area. Do a budget. Don’t spend money you have not made. Set up files, keep receipts. Remit taxes at source, HST and personal income tax. It is not your money and never will be. You do not want to be hounded by the CRA.

5. You are your own administrator.

Create an excellent calendar and keep a log. Write down everything you are doing in your business. Track where your time is going and what is bringing you success. Where are your leads coming from? What isn’t working for you?

6. You are your own PR department.

Write down the names and contact information of everyone you know and create a database. Grow your sphere of influence. Let everyone you meet know you are in real estate and ask them if they have a trusted real estate advisor, or if they would they consider working with you. Email or snail mail some information of value to your database at least once every quarter.

7. Project that you need to talk to 100 people about real estate before you get one firm transaction.

This doesn’t include friends and family, who may or may not want to do business with you. If you want to do 10 transactions this year, you need to talk to 1,000 people about what you do. If you don’t believe this, start counting.

8. Do 100 open houses this year.

Yes, 100. That is your magic number. It could be one or two or four a weekend. It could be some weeknights or non-traditional times. Try various times and see what works for you. If you don’t like open houses, go door-knocking. You need to talk to people face to face about real estate.

Don’t just do 100 open houses, do 100 great open houses. Quantity isn’t enough. Learn which agents have properties where you can host an open house and introduce yourself. Develop an open house plan for yourself, a system, to make sure you are well informed about the house, the neighbourhood amenities, recent neighbourhood sales and new listings. Preview the property. Spend two hours of prep time for each hour of every open house. Show the listing agent you are organized and committed. Arrive at least 15 minutes before you open – be there before the buyers! Treat each open house like a job interview. You are looking to find a buyer or a seller who will “hire” you.

9. Do floor time, duty.

Yes, it is boring to sit in the office waiting for someone to call, but many agents don’t show up so there is real opportunity here. It might not amount to a lot, but it gives you a chance to talk to more people about real estate. Study pricing or neighbourhoods while you are waiting for the phone to ring, not YouTube videos of cat capers. But don’t only do duty and don’t do it on weekend afternoons when you should be doing open houses.

10. Go to your weekly sales meeting and agent tour, if your brokerage offers it.

See as many houses as you can. Study the pricing, listen to what other agents are saying about the listing, research how the agent might have come up with the list price. Watch how much it sells for. You need to see a lot of houses before you can become good at pricing. Research neighbourhoods. Every week, study a new neighbourhood. Drive around, walk around. Learn amenities, schools, parks and places of worship. Study typical home styles. Study pricing history of that neighbourhood for the last 12 months. Next week, do the same for another neighbourhood. Next week, do it again, until you know the whole city this way.

And show up. The first few weeks can be very discouraging. Keep on with the basics. After awhile of doing the core things over and over again, something will take hold. You will find your niche, your best way of engaging with clients, and you can build on that. But it won’t happen if you don’t show up. You are a million times more likely to pick up a duty call if you are at the office than if you are sitting at home or hanging out around town.

A key tool for successful realtors is a real estate CRM. A CRM can be a game-changer when it comes to contact management, as it contains all your client contact profiles, can be setup with automated email and e-newsletter campaigns, and has reminders for your clients special events so that you’re always in-the-know! Try IXACT Contact real estate CRM. IXACT Contact offers Rookie Realtors a 6 month FREE trial! Sign up today and kick-start your new business!

 

If your buyers are being ignored by the bank, consider a loan from the seller.

In today’s stymied real estate market, lenders are more cautious about making loans and sellers are more inclined to agree to carry financing to sell their properties more quickly. Here’s a look at how installment sales could work for your clients.

Installment sales are structured so that the seller receives payments for parts of the purchase price over a period of time following the closing.

If a buyer makes a substantial down payment and is sufficiently creditworthy, and if the seller either owns a property outright or has the resources to pay off any remaining mortgage, installment sales can be beneficial to both parties.

An installment sale also enables a seller to defer income taxes when at least one installment payment is received after the tax year in which the transaction closed. The seller recognizes the gain over the taxable years in which the payments are actually received.

Deferring taxes can be a real benefit to home owners whose capital gain exceeds the $250,000 individual exemption on the sale of a principal residence or who haven’t held the home for the two-year period required. Installment sales also benefit investment sellers who don’t want to use a Section 1031 exchange to defer taxes.

Each installment payment consists of three elements:

  • A partial return of the seller’s adjusted basis in the property sold, which isn’t taxable to the seller.
  • A portion of the taxpayer’s realized gain on the sale, which is taxable as a capital gain.
  • Accrued interest, which is taxable as ordinary interest income. An installment note must include an adequate stated rate of interest to be paid by the buyer. An adequate rate of interest is equal to or greater than the rate published by the IRS.

Each year, a seller receiving payments from an installment sale must determine how much of the year’s payments are taxable as capital gains and how much are a nontaxable recovery of the seller’s cost basis.

The taxpayer’s adjusted basis starts with the original purchase price, including initial closing costs. It then increases by any capital improvements and the selling expenses incurred in the sale. It’s reduced by any depreciation taken during the time of the seller’s ownership. The taxpayer multiplies the non-interest portion of the total payments received in that year by the gross profit ratio for the sale.\

The gross profit ratio is the taxpayer’s total anticipated gross profit divided by the total contract price. The anticipated gross profit is the contract price less the taxpayer’s adjusted basis. The contract price is equal to the selling price, reduced by the amount of any qualifying indebtedness that is assumed by the buyer.

Qualifying indebtedness is limited to the seller’s adjusted basis in the property. If the seller has refinanced the property and taken cash in an amount that creates indebtedness greater than the seller’s adjusted basis, the qualified indebtedness for purposes of calculating the contract price is limited to the adjusted basis.

Consider the example of a sale of raw land (below). In Year 1, Seller sold Black Acres to Buyer for $1.2 million. Buyer paid $200,000 in cash at closing and agreed to assume the current $200,000 mortgage. Seller agreed to finance $800,000 of the purchase price over a five-year installment note, with the first installment being due in Year 2.

The gross profit of $400,000 is divided by the seller-financing contract price of $1 million to determine a gross profit ratio of 40 percent. In applying this gross profit percentage to the $200,000 received in Year 1, the seller will recognize $80,000 of gain in the year of the sale. If the principal portion of the payments received by seller in Year 2 is equal to $160,000, the seller will recognize gain equal to 40 percent of $160,000, or $64,000 in Year 2. (Note that gain on real property that depreciates, such as an office building, would be calculated differently because gain from depreciation is taxed at 25 percent.)

Installment sellers should consult an attorney to better understand the risks of default by the buyer and inquire about ways to reduce the risk.

Calculating Gain

Selling price: $1,200,000

Less assumed mortgage: ($200,000)

Contract price: $1,000,000

Adjusted basis: ($720,000)

Selling expenses: ($80,000)

Gross profit (selling price minus adjusted basis minus selling expenses): $400,000

 Find out what tools the honorees from REALTOR® Magazine’s 2016 class of 30 Under 30 are using to get the job done on behalf of their clients.

young business people discussing ideas

Online reviews aren’t just for restaurants; they are equally useful for real estate marketing. They also happen to be Kimberly Sethavanish’s secret weapon.

Sethavanish, a salesperson at Century 21 Alliance in Santa Rosa, Calif., has gained three listings from clients finding her positive reviews on Yelp. After each transaction, Sethavanish asks her clients to share their experience with her services and, for the most part, they are happy to help. And best of all, these highly persuasive online reviews are free.

“If you’re not putting yourself out there, you’re not able to be found. That’s worse than anything else,” says Sethavanish, a member of REALTOR® Magazine’s 2016 class of 30 Under 30.

For this year’s 30 young entrepreneurs, technology and online tools are a way of life in their business, keeping them connected to clients and organized at the office and helping to smooth out any bumps in the road to a successful transaction.

We asked a few of the 30 Under 30 honorees to share the tech tool that keeps them on track. Here’s what we found:

They’re Paperless

In addition to online reviews, Sethavanish is also a fan of DocuSign because it helps cut the response time in her hot seller’s market. “I’ve seen it make or break a sale,” she says. “With DocuSign, you can get your counteroffer in before someone else does.”

Several other 30 Under 30s also attest to the benefits of electronic signatures.

Shari Anhorn, CRS, GRI, team member and broker-owner at Brokers 12 Inc. in Minot, N.D., has been using DocuSign, a REALTOR Benefits® Program partner, since 2011, putting her among the first agents in Minot to use electronic signatures.

“This is rural North Dakota, and to be able to have a seller or buyer who is two hours away sign a document from afar is tremendous,” she says. What’s more, many of her clients are military personnel who have to purchase property sight unseen, and DocuSign has eased the process, Anhorn says.

But some 30 Under 30 members are careful not to assume every client knows how to use even the most basic technology.

The market that Diego Espinoza-Martinez, salesperson with Keller Williams Realty-Tulare in Visalia, Calif., serves is largely agricultural and heavily impoverished. While he uses DocuSign with some clients, it’s not always appropriate, he says. Instead, Espinoza-Martinez takes the time to learn his clients’ comfort level with technology and then decides on the appropriate tools for the transaction.

Another tool for going paperless is Genius Scan, available through both the App Store and Google Play. Wade Corbett, CRS, GRI, salesperson with Keller Williams Realty in Raleigh, N.C., is an avid user. “I scan a business card and import it into my database. That way, I don’t have to carry around a bunch of cards,” he says.

Genius Scan can be used to scan forms, receipts, or a multitude of other real estate documents from your smartphone. Save the images as PDFs and email them on the go. You can also export the files to your cloud service of choice, such as Dropbox or Google Drive.

Alexander Parker, also a 2016 30 Under 30 honoree, creates property folders in Dropbox for his clients, where they can share pictures, maps, and other relevant documents. Parker, salesperson with Lord & Stanley Realty in Tallahassee, Fla., is also rarely without his iPad so that he can access files anywhere and look them over with clients in the field.

In San Diego, Sarah Davis, SRES, broker owner of Davis Estates, takes her Surface Pro tablet to every client meeting. “I can take it to a showing and the buyers can sign a purchase order and send it to the listing agent while we’re still in the house,” she says. In California, agents are required to give a copy of the contract to the signer at the time it is signed, so she emails a copy to her clients directly from her tablet.

For software, she uses Microsoft OneDrive for Business, a secure cloud service, for all her transaction files. “It’s safer than email, and if my computer dies, everything is still in the cloud,” Davis says.

They Work Hard at Staying in Touch

Connie Chung, salesperson with Vanguard Properties in San Francisco, considers herself old-fashioned when it comes to staying in contact with her clients. She prefers dinners and coffee meetings over informal emails. “I can see their facial expressions, hear the tone of their voices, and have them hear mine,” she says.

And when a client needs more attention — when they’ve expressed unhappiness with a property or have an issue that needs to be resolved — Chung says that writing an email is the last thing you should do. “I find it simplifies my life if I pick up the phone, so I can really hear where they are coming from and ask if we can meet for coffee,” she says. “A lot of times, meeting face-to-face takes away any discomfort for both parties.”

On the social media front, she engages with clients and her sphere predominantly through Instagram. “Recently, I was touring a new development. It was great to wear a hard hat and neon vest and post behind-the-scenes photos that a lot of people don’t usually get to see,” she says.

Corbett describes his database as the core of his business, so he uses Brivity, a cloud-based CRM, to stay in touch. “It helps me follow up better and makes me able to utilize my time better,” he says.

Honoree Rebekah Eaton, associate broker with RealtySouth-MB-Crestline in Birmingham, Ala., is always looking for meaningful ways to stay connected to her sphere. So she recently started using BombBomb, a service that helps users produce video greetings that can be shared via email or text. “I take a little time to record a short video saying, ‘Thinking about you.’ And then I send it on. Bam.”

They Prefer to Market in a Meaningful Way

Scott Steadman, a Windermere Real Estate agent in Draper, Utah, uses his real estate blog to tell the story of his clients. “I talk about the family who spent years gathering around the fireplace for birthdays and holidays, and how that room was the place where they felt whole,” Steadman says. “Pairing posts like that with social media always gives my followers a reason to come back to my website for more info.”

Consistency is also key, Steadman says, so he rarely lets more than a few days separate his posts, which cover everything from market trends to before-and-after renovation photos.

Brittany Barsky-Allison, team member with Wydler Brothers in Bethesda, Md., focuses on promoting her business on Facebook in a “fun, organic way.” She creates an advertising campaign for every one of her listings, and she often posts pictures with clients or of homes she’s toured on her personal and business pages. She celebrates each closing with a status update and is frequently “liking” and commenting on her friends’ statuses and photos.

“This has helped me to pick up referrals and create a sense of expertise amongst my peers,” she says. “Brokerages must continue to place more emphasis on the people in the real estate industry and recognize that people buy homes, not computers, robots, or smartphones. Technology strengthens our industry, but people are at the core, and we cannot forget that simple fact.”

Barsky-Allison uses Salesforce.com to track her pipeline and communicate with her sphere of influence. She sends out weekly and monthly emails as well as monthly market updates, and acknowledges the buy or sell anniversaries of her clients by sending a note or gift.

Customer service is a top priority for honoree Jessica Bean, salesperson with Century 21 Price Right in Lewiston, Idaho. That’s why she arms herself with data from NAR’s Realtors Property Resource® before every marketing or listing presentation.

“It’s one of the most integral pieces of my business,” says Bean, who will compare RPR’s detailed reports against her own research on comps as well as the assessed value of a property. The reports also help her make the case that presale updates can make a listing much more attractive.

Bean also notes that RPR can help her craft a competitive offer in the seller’s market that currently defines much of her area. She uses it to help buyers put themselves in sellers’ shoes, explaining how she’d use the RPR data to price the home if she were the listing agent on the property. And finally, Bean loves the fact that she can pull RPR up on her phone on the go: “I literally use it every day in my business. Man, it’s a lifesaver for me.”

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Thursday, 2 Jun 2016 | 9:26 AM ET

It looks so easy on TV. Buy a bargain-basement house, pull up some nasty carpet, re-tile the bathroom, paint away the wall stains and sell it for a hefty profit.

It’s not, however, all those popular shows that are driving the flipping market today. It’s pure and simple prices — and profit. There is a severe lack of good quality, turn-key homes for sale, and that has created a seller’s market across the nation, even for those reselling homes.

After cooling off in 2014, home flipping is on the rise again — its share of all home sales is up 20 percent in the first three months of this year from the previous quarter and up 3 percent from the same period a year ago, according to a new report from RealtyTrac, which defines a flip as a property bought and resold within a 12-month period.

While flipping today is nothing like it was during the housing boom a decade ago, when investors used risky mortgages, it is reaching new peaks in 7 percent of the nation’s metro markets, including Baltimore, Buffalo, New Orleans, San Diego and even pricey Seattle.

Dana Rice, real estate agent and home flipper, at her latest project in Bethesda, Maryland, a very small colonial, within walking distance to shops and Metro.

Diana Olick | CNBC
Dana Rice, real estate agent and home flipper, at her latest project in Bethesda, Maryland, a very small colonial, within walking distance to shops and Metro.

“While responsible home flipping is helpful for a housing market, excessive and irresponsible flipping activity can contribute to a home price pressure cooker that overheats a housing market, and we are starting to see evidence of that pressure cooker environment in a handful of markets,” said Daren Blomquist, senior vice president at RealtyTrac.

That’s because flippers today largely use cash — 71 percent did in the first quarter of this year. Compare that to just 27 percent who used cash at the height of the housing boom. That helps keep most flippers conservative, but it also exacerbates the problems for entry-level homebuyers, who are facing one of the tightest housing markets in history. They simply can’t compete against all-cash buyers.

Usually flippers look for distressed properties either in the foreclosure process or already bank-owned. These are not always listed on public sale sites. There are fewer of those today, so flippers are moving to the mainstream market, creating that new pressure.

“A telltale sign is when flippers are acquiring properties at or close to full market value. Those markets are so competitive that even the off-market properties flippers are looking to buy are not selling at much of a discount — and there may be very few distressed properties available,” said Blomquist.

Examples of these markets include San Antonio, where Blomquist says flippers are actually purchasing at a 7.8 percent premium above estimated full market value, as well as Austin, Texas; Salt Lake City; Naples, Florida; Dallas and San Jose, California.

Despite the premium to buy, flippers are still seeing growing gains in profit. Home flippers realized an average gross profit of more than $58,000 in the first quarter of this year, the highest since the third quarter of 2005, according to RealtyTrac.

Real estate agent Dana Rice and her husband flip houses in the tony D.C. suburb of Bethesda, Maryland. Prices there are well above the national median, and there are few distressed properties. Instead, they target old, small fixer-uppers. Even those command a hefty purchase price up front, but they can also offer big rewards.

“I didn’t want a teardown. There is so much character in this part of Bethesda,” said Rice. “I don’t think that everybody wants a brand new build. There is a hole in the market because not everyone wants to do a renovation. If you put a little bit of effort in, these numbers can be huge.”

Rice purchased her latest project, a very small colonial, within walking distance to shops and Metro, for $680,000. She expects to put half a million dollars into the renovation, adding both square footage and high-end finishings; she is confident that in this competitive market she will see an 18-25 percent return on investment.

“It’s like birthing a baby. … If you’re overpriced, you’re dead in the water.” -Dana Rice, real estate agent and home flipper

“It’s like birthing a baby,” she said, noting that she will wait to list it until she feels the market is just right. “If you’re overpriced, you’re dead in the water.”

The lack of inventory is certainly a double-edged sword for flippers. Their initial investment price can be high, and flippers are often competing against local builders, who may want to tear the house down and put something up that is twice the size. On the other hand, not everyone wants or can afford a huge, new, expensive home, and that gives flippers the edge.

“The key here is that there is particularly a dearth of listed inventory in good condition,” said Blomquist. “That is the inventory flippers are competing against when they sell.”

Reference Book – A Real Estate Guide

* Please note, format and page numbers differ from the printed version. The printed version will be available for purchase after January 5, 2011. To purchase a copy, submit a Publications Request (RE 350) . The chapters of the Reference Book below are in PDF format. You will need Adobe Reader to view them.

Reference Book

  • Introduction
    Cover, Preface, Location of Department of Real Estate Offices, Past Real Estate Commissioners, A Word of Caution
  • Chapter 1 – The California Department of Real Estate
    Government Regulation of Brokerage Transactions, Original Real Estate Broker License, Corporate Real Estate License, Original Salesperson License, License Renewals – Brokers and Salespersons, Other License Information, Continuing Education, Miscellaneous Information, Prepaid Residential Listing Service License, Enforcement of Real Estate Law, Discrimination, Notice of Discriminatory Restrictions, Subdivisions, Department Publications, Recovery Account
  • Chapter 2 – The Real Estate License Examinations
    Scope of Examination, Preparing for an Exam, Exam Construction, Examination Weighting, Exam Outline, Exam Rules – Exam Subversion, Materials, Question Construction, Multiple Choice Exam, Q and A Analysis, Sample Multiple Choice Items
  • Chapter 3 – Trade and Professional Associations
    Real Estate Associations and Boards, Related Associations, Ethics
  • Chapter 4 – Property
    Historical Derivations, The Modern View, Personal Property, Fixtures, Legal Difference Between Real and Personal Property, Land Descriptions, Other Description Methods
  • Chapter 5 – Title to Real Property
    California Adopts a Recording System, Ownership of Real Property, Separate Ownership, Concurrent Ownership, Tenancy in Partnership, Encumbrances, Mechanic’s Liens, Design Professional’s Lien, Attachments and Judgments, Easements, Restrictions, Encroachments, Homestead Exemption, Assuring Marketability of Title
  • Chapter 6 – Transfer of Interests in Real Property
    Contracts in General, Essential Elements of a Contract, Statute of Frauds, Interpretation, Performance and Discharge of Contracts, Real Estate Contracts, Acquisition and Transfer of Real Estate
  • Chapter 7 – Principal Instruments of Transfer
    A Backward Look, the Pattern Today, Deeds in General, Types of Deeds
  • Chapter 8 – Escrow
    Definition, Essential Elements, Escrow Holder, Instructions, Complete Escrow, General Escrow Principles, General Escrow Procedures, Proration, Termination, Cancellation of Escrow – Cancellation of Purchase Contract, Who May Act As Escrow Agent, Audit, Prohibited Conduct, Relationship of Real Estate Broker and the Escrow Holder, Designating the Escrow Holder, Developer Controlled Escrows – Prohibition
  • Chapter 9 – Landlord and Tenant
    Types of Leasehold Estates, Dual Legal Nature of Lease, Verbal and Written Agreements, Lease Ingredients, Contract and Conveyance Issues, Rights and Obligations of Parties to a Lease, Condemnation of Leased Property, Notice Upon Tenant Default, Non-Waivable Tenant Rights, Remedies of Landlord, Disclosures by Owner or Rental Agent to Tenant
  • Chapter 10 – Agency
    Introduction, Creation of Agency Relationships, Authority of Agent, Duties Owed to Principals, Duties Owed to Third Parties, Rights of Agent, Termination of Agency, Special Brokerage Relationships, Licensee Acting for Own Account, Unlawful Employment and Compensation, Broker-Salesperson Relationship, Conclusion
  • Chapter 11 – Impact of the Penal Code and Other Statutes
    Penal Code, Unlawful Practice of Law, Business and Professions Code, Civil Code, Corporations Code
  • Chapter 12 – Real Estate Finance
    Background, The Economy, The Mortgage Market, Overview of the Loan Process, Details of the Loan Process, Federal and State Disclosure and Notice of Rights, Promissory Notes, Trust Deeds and Mortgages, Junior Trust Deeds and Mortgages, Other Types of Mortgage and Trust Deed Loans, Alternative Financing, Effects of Security, Due on Sale, Lender’s Remedy in Case of Default, Basic Interest Rate Mathematics, The Tools of Analysis
  • Chapter 13 – Non-Mortgage Alternatives To Real Estate Financing
    Syndicate Equity Financing, Commercial Loan, Bonds or Stocks, Long-Term Lease, Exchange, Sale-Leaseback, Sales Contract (Land Contract), Security Agreements (Personal Property)
  • Chapter 14 – Real Estate Syndicates and Investment Trusts
    Real Estate Syndication, Real Estate Investment Trusts
  • Chapter 15 – Appraisal and Valuation
    Theoretical Concepts of Value and Definitions, Principles of Valuation, Basic Valuation Definitions, Forces Influencing Value, Economic Trends Affecting Real Estate Value, Site Analysis and Valuation, Architectural Styles and Functional Utility, The Appraisal Process and Methods, Methods of Appraising Properties, The Sales Comparison Approach, Cost Approach, Depreciation, Income (Capitalization) Approach, Income Approach Process, Income Approach Applied, Residual Techniques, Yield Capitalization Analysis, Gross Rent Multiplier, Summary, Appraisal of Manufactured Homes (Mobilehomes), Evaluating the Single Family Residence and Small Multi-Family Dwellings, Typical Outline for Writing the Single Family Residence Narrative Appraisal Report, Conclusion, Additional Practice Problems, The Office of Real Estate Appraisers (OREA)
  • Chapter 16 – Taxation and Assessments
    Property Taxes, Taxation of Mobilehomes, Special Assessments, Certain Assessment Statutes, Federal Taxes, Documentary Transfer Tax, State Taxes, Miscellaneous Taxes, Acquisition of Real Property, Income Taxation
  • Chapter 17 – Subdivisions and Other Public Controls
    Basic Subdivision Laws, Subdivision Definitions, Functions in Land Subdivision, Compliance and Governmental Consultation, Types of Subdivisions, Compliance With Subdivided Lands Law, Handling of Purchasers’ Deposit Money, Covenants, Conditions and Restrictions, Additional Provisions, Grounds For Denial of Public Report, Subdivision Map Act, Preliminary Planning Considerations, Basic Steps in Final Map Preparation and Approval, Types of Maps, Tentative Map Preparation, Tentative Map Filing, Final Map, Parcel Map, Other Public Controls, Health and Sanitation, Eminent Domain, Water Conservation and Flood Control, Interstate Land Sales Full Disclosure Act
  • Chapter 18 – Planning, Zoning, and Redevelopment
    The Need For Planning, General Plans, Redevelopment
  • Chapter 19 – Brokerage
    Brokerage as a Part of the Real Estate Business, Other Specialists, Operations, Office Size – Management, Office Size, Career Building, The Broker and the New Salesperson, Specialization, A Broker’s Related Pursuits, Professionalism, Mobilehome Sales
  • Chapter 20 – Contract Provisions and Disclosures in a Residential Real Estate Transaction
    A Basic Transaction, A Basic Listing, Purchase Contract/Receipt of Deposit, Disclosures
  • Chapter 21 – Trust Funds
    General Information, Trust Fund Bank Accounts, Accounting Records, Other Accounting Systems and Records, Recording Process, Reconciliation of Accounting Records, Documentation Requirements, Additional Documentation Requirements, Audits and Examinations, Sample Transactions, Questions and Answers Regarding Trust Fund Requirements and Record Keeping, Summary, Exhibits
  • Chapter 22 – Property Management
    Professional Organization, Property Managers and Professional Designations, Functions of a Property Manager, Specific Duties of the Property Manager, Earnings, Accounting Records For Property Management
  • Chapter 23 – Developers of Land and Buildings
    Subdividing, Developer-Builder, Home Construction
  • Chapter 24 – Business Opportunities
    Definition, Agency, Small Businesses and the Small Business Administration, Form of Business Organization, Form of Sale, Why an Escrow?, Buyer’s Evaluation, Motives of Buyers and Sellers, Counseling the Buyer, Satisfying Government Agencies, Listings, Preparing the Listing, Establishing Value, Valuation Methods, Lease, Goodwill, Fictitious Business Name, Franchising, Bulk Sales and the Uniform Commercial Code, California Sales and Use Tax Provisions, Alcoholic Beverage Control Act
  • Chapter 25 – Mineral, Oil and Gas Brokerage
    History, Mineral, Oil and Gas Brokerage, 1994 – No Separate License Requirements
  • Chapter 26 – Tables, Formulas, and Measurements
  • Chapter 27 – Glossary
original article

productive realtorProductivity is a popular subject these days and rightfully so! I would argue that we fight more distractions in our work day than any cohort of working adults before us. Are you maximizing your productivity as a real estate agent, or is it a constant battle for you to work smart and complete your tasks each day?

I sleep better at night when I feel like I had a productive day, and I can’t help but feel frustrated on the days that I wasn’t as productive as I could have been.  I’ve compiled a list of 5 habits that interfere with productivity, and some suggestions on how you can turn them around to be a more productive Realtor.

Habit 1. Beginning your day in a frenzy.

The first few moments of your day set the tone for the rest of your day.  Do you rush around the house, down a cup of coffee, and barely leave time to brush your teeth? Lots of us are in the habit of hitting the snooze button a few too many times and rushing through the house in semi-panicked chaos.  This hectic morning habit takes a toll on your well-being and productivity for the day.

Break the manic morning habit by setting your alarm 10-30 minutes earlier. Take some time to breathe before you start your day. Choosing your outfit and preparing your lunch the night before can relieve your morning stress. You’ll begin your day feeling calmer, more centered, and more industrious.

Habit 2. Working without structure.

Some people roll their eyes at the notion of a “to-do” list. But the reality is that most successful Realtors swear by some sort of task list. You’ll struggle to focus on a task without a defined list in place to structure your work day or week. Many of us tend to work on whichever project is the easiest or most urgent without mapping out the other important items that also need to be completed.

Start structuring your day by using a “to-do” list and reviewing it each morning.  Focus on the items on your list and tackle something challenging first thing in the morning. It feels good to check something off the list and most of us are more motivated and clear minded when the day gets started. A good real estate CRM will come equipped with a task list. It will even send you reminders of when it’s time to check off an item.

Habit 3. Overdoing the Multitasking.

Yes, real estate agents are always on the go, and yes they have a thousand things to do at any given time. I would wager a guess that you consider yourself an excellent multitasker, am I right? There is a time and place for multitasking. However “singletasking” can be just as important when you’re working on an important project.

Research at the University of Michigan showed that a 3 second distraction can lead to double the mistakes in your work. So when you’re bouncing between two tasks as a multitasker, you’re more likely to make more errors. And unfortunately, working on two tasks at the same time can result in poor cognitive performance on both tasks.  For a real estate agent who is working with sensitive timelines, financial documents, and tight schedules, you want to avoid as many errors as possible. Resist the urge to work on multiple tasks at the same time and try “singletasking” one important thing before moving on to the next. Your work will be more accurate and your productivity will increase!

Habit 4. Postponing dealing with something.

Do you ever skim an email and think, “I’ll deal with that later”? Then the next day you look at it and postpone it again, you think about it a few more times and eventually you reply to the email days (or weeks) later? If you had replied to the email immediately, you would have saved time, energy and space in your inbox! Postponing tasks is a time vacuum that many of us fall in to.

Whenever possible, try dealing with items only once.  This rule applies well to emails, meeting invitations, or requests for help. When you deal with an item only once, it frees up your mind to move on to more pressing issues, and increases your potential to be productive.

Habit 5. Manually carrying out tasks.

Some important tasks are time consuming, but they can’t be avoided, right? Well, it depends. There are some amazing tools available to Realtors now that can automate much of your work for you, freeing up more of your time to focus on selling homes!

Do you spend time frantically trying to find a past client’s phone number, or attempting to respond to web leads via email? Tasks like these are unavoidable, but they don’t have to dominate your entire day! Choose a real estate CRM and email marketing solution where you can organize all of your contacts in a single database, then take advantage of the automated features to free up your time.  A good CRM can send follow-up emails to leads and even assign them to a drip email nurture campaign, so your new leads are receiving communications from you without you having to type them out! Automated task reminders will ensure you’re not forgetting any important to-do’s. Stop manually working on tasks that can run like clockwork with little to no effort!

Takeaways

Do any of these productivity-sucking habits sound familiar to you? Feeling productive can alleviate stress and improve your overall well-being. Try these tips to structure your day more efficiently, focus on a single task at a time, and deal with tasks just one time.  Perhaps most importantly, find the right real estate CRM that can help you get better organized and automate many of your important tasks.

Nothing can kill a sale faster than a dated, closed-in kitchen area. Many of today’s buyers see the kitchen as the home’s command center, and not just a place for cooking and eating. They want the kitchen to be many things at once, hence the rise in popularity of what is known as the multifunctional open-concept kitchen.

Read more: 9 Modest Fixes for the Problem Kitchen

If your clients are looking to renovate an existing kitchen, or you need to advise them on building one that’s brand-new, the Washington Post shared some background on how they can design a kitchen space so that it’s functional in many different way.

“Whether you are renovating existing structure or building new, architects fully recognize the need for space that is designed for movement and flow,” says Stephanie Brick, senior designer at Sustainable Design Group, in Gaithersburg, Md. “There are still rules and important elemental guidelines — you do not want to just delete all of the walls on your first floor. But by being selective in the design, materials and professionals you work with, you can easily achieve a space that does not merely react to, but anticipates, your bustling lifestyle.”

The two main considerations when designing a multifunctional space are wall placement and storage. While it may seem like an easy solution to knock down walls, Brick says there are other architectural solutions, like open doorways, that can give a similar effect while keeping the space architecturally interesting.

Being as honest as possible about individual organizational and storage needs is key when creating a multifunctional kitchen. For some owners who want to use the kitchen as a makeshift homework area or as a place to handle their bills, adding storage for these needs will be necessary. If your clients do a lot of cooking and entertaining for large groups, they will want to make sure the kitchen has space and storage to accommodate that process. If the family has small children, the kitchen can be designed with their safety in mind.

Brick has one final piece of advice when designing this type of kitchen space. “Honesty with your architect is key to creating a strong working relationship and delivering an equally beautiful and functional space in your home.”

Source: “How to create a live/work/play space at home,” The Washington Post (June 8, 2016)

via Now Trending: The Multifunctional Kitchen | Realtor Magazine

Seller Financing

In some situations, sellers are lining Lending Standards, Seller Financing. CFPB
Finalizes Loan 2013, The Consumer Financial Protection Bureau
www.realtor.org/topics/seller-financing – 2012-03-15

Seller Financing May Be Worth Exploring | Realtor Magazine

In today’s stymied real estate market, lenders are more cautious about making loans and sellers are more inclined to agree to carry financing to sell their properties more quickly. Here’s a look at how installment sales could work for your clients.
realtormag.realtor.org/law-and-ethics/law/article/2008/12/seller-financing-may-be-worth-exploring – 2008-12-01

Get Seller Financing to Work for You | Realtor Magazine

Seller financing has been a hot issue in recent real estate news due to the changes in regulations, specifically in the Dodd-Frank Act. Here’s what you need to know to incorporate this method into your business strategy and be the best advocate for your clients.
realtormag.realtor.org/law-and-ethics/feature/article/2015/04/get-seller-financing-work-for-you – 2015-04-06

Seller Financing: Background

Seller financing is subject to new rules following the passage of financial reform legislation. Know these changes in order to serve sellers better.
www.realtor.org/topics/seller-financing/background – 2012-01-17

My Account

Seller financing plays an important role in financing the sale of real estate, especially when credit is tight. This paper summarizes the impact of two federal laws that affect seller financing. Seller financing plays an important role in financing the sale of real estate, especially when credit is tight. This paper summarizes the impact of two federal laws that affect seller financing.
www.realtor.org/reports/seller-financing-impact-of-the-safe-act-and-the-dodd-frank-act – 2012-01-12

Sales Clinic: Expand Your Market with Seller Financing | Realtor Magazine

Are there any creative ways to sell a home that will maximize the salesperson’s value? —Timothy Baker, RE/MAX Affiliates, Naperville, Illinois If you want to be a top salesperson, you always have to be on the lookout for new and creative ideas to set yourself apart from the pack.
realtormag.realtor.org/…/feature/article/1999/12/sales-clinic-expand-your-market-seller-financing – 1999-12-01

Ways to Protect Yourself Under Seller Financing | Realtor Magazine

TIP: Instead of taking back an installment loan, per se, have the buyer purchase an annuity or some zero-coupon bonds in your name. These can often be bought at deep discounts to eventual payout, lowering the sale price, but guaranteeing you a higher future return.
realtormag.realtor.org/…/sell-your-business/article/ways-protect-yourself-under-seller-financing

NAR Submits Comments on CFPB’s Proposed Seller Financing Rules

On Oct. 15, 2012, NAR President submitted comments to the CFPB on its loan originator proposed rule. On Oct. 15, 2012, NAR President submitted comments to the CFPB on its loan originator proposed rule.
www.realtor.org/articles/nar-submits-comments-on-cfpbs-proposed-seller-financing-rules – 2012-10-19

Sellers Can Fill a Void | Realtor Magazine

If you’re working with sellers who have seen offers collapse because buyers can’t get a mortgage loan, you might want to suggest they consider offering some variation of seller financing.
realtormag.realtor.org/law-and-ethics/law/article/2011/07/sellers-can-fill-void – 2011-07-01

Seller Financing: The SAFE Act

In 2008, President Bush signed the Secure and Fair Enforcement of Mortgage Licensing Act or SAFE Act, which requires licensing and registration of loan originators.
www.realtor.org/topics/seller-financing/the-safe-act – 2012-03-15
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Looking for something else? Search the archive for many resources created before 2009.

 

Field Guide to Lease-Option Purchases

(Updated April 2016)

Lease-option agreements* are common when acquiring personal property—such as dishwashers, washing machines, automobiles, and TVs—but are not as common for the acquisition of real property. Lease-option agreements are generally utilized in residential real estate acquisition when a home buyer would like to purchase a home, but needs to repair her credit rating in order to secure a promissory note and mortgage. The lease-option agreement allows a buyer to lease a property for a set period of time—typically between 1-3 years—with the option to buy the property at a contractual future date. “The negotiated option is typically a percentage of the price for example, one to five percent, and is credited, along with the rents and a rent premium, to the purchase price if the lessee buys the property. If the option to buy is not exercised, the buyer will lose the option fee and rent premium.” (Real Estate Law (link is external), p. 227). Read the articles below to learn more about this alternative real estate financing option. (H. Hester, Information and Digitization Specialist)

*Also known as lease-to-own, rent-to-own, lease/purchase, lease with an option to purchase, or real options.


E – EBSCO articles available for NAR members only. Password can be found on the EBSCO Access Information page.


Lease to Own: The Basics

Is rent-to-own the future of housing? (link is external), (HousingWire, Jan. 14, 2016).

Investors Bank on Rent-to-Own Comeback (REALTOR® Magazine, July 29, 2015).

How do Lease Purchase Agreements Work? (link is external) (SFGate, n.d.).

How Do I Get a List of Rent to Own Homes? (link is external) (realtor.com®, July 25, 2012).

How Do I Find A Rent To Own Home In Bristol, Pennsylvania? (link is external) (realtor.com®, May 10, 2012).

How Do I Find A Realtor To Explain The Rent To Own Option? (link is external) (realtor.com®, Apr. 6, 2012).

Lease-to-Own Contracts (link is external), (UCLA School of Law, 2012).

Lease options are back: proceed carefully (link is external), (Realty Times, Oct. 25, 2011).

Sale-Leaseback Transactions: Price Premiums and Market Efficiency (link is external), (Journal of Real Estate Research, Apr.-June 2010). E

Informal Homeownership in the United States and the Law (link is external), see page 132. (University of Texas School of Law, 2010).

How lease-options benefit sellers, buyers … and their REALTORS®? (link is external), (CRE Online, n.d.).

Thought about lease-to-own transactions?, (REALTOR® Magazine – Speaking of Real Estate blog, Aug. 6, 2009).

Renting to Own (link is external), (realtor.com®, n.d.)

Case Studies & Examples

A Valuation Framework for Rent-to-Own Housing Contracts (link is external), (The Appraisal Journal, Summer 2014). E

Lease-to-own deals offer options in sluggish Tampa Bay housing market (link is external), (St. Petersburg Times, Oct. 23, 2011).

Can I get a lease option with bad credit? (link is external), (realtor.com®, May 5, 2011).

A Growing Housing Imbalance (link is external), (Mortgage Banking, Oct. 2011). E

Raising Capital Through Sale-Leasebacks (link is external), (Public Management, June 2010). E

Tax Implications

Individual Taxation Developments (link is external), (The Tax Adviser, Mar. 2012). E

Comparing Accounting and Taxation for Leases: Certified Public Accountant (link is external), (The CPA Journal, Apr. 2009). E

Tax Considerations for Buying and Selling Property with a Burdensome Lease (link is external), (Journal of Accountancy, 2009). E

Government Publications & Programs

State Agency Lease/Purchase Program (link is external), (Washington State Treasurer’s Office, n.d.).

Recent State Agency Lease/Purchase Interest Rates – Real Estate Only (link is external) (Washington State Treasurer’s Office, n.d.).

Definition from Washington State:

Lease/Purchase Obligations (Real Estate) — Lease/purchase obligations are contracts entered into by the state which provide for the use and purchase of real or personal property, and provide for payment by the state over a term of more than one year. For reference, see RCW chapter 39.94 “Financing Contracts.” Lease/purchase obligations are one type of lease-development alternative.” (Financial Budget Instructions Glossary of Terms (link is external), Washington State Office of Financial Management, n.d.).

Non-Mortgage Alternatives to RE Financing (link is external) from Reference Book – A Real Estate Guide (link is external), (California Department of Real Estate, 2010).

LFC Hearing Brief (link is external), (New Mexico Legislative Finance Committee, Dec. 2007).

Instructions for the Lease/Purchase Analysis Modeling Tool (link is external), (Idaho State Leasing Dept. of Administration, n.d.).

eBooks & Other Resources

The following eBooks and digital audiobooks are available to NAR members:

eBooks.realtor.org

Smart Guide to Real Estate: Step by Step Rent to Own, (Kindle and ePub)

Investing in Rent-to-Own Property, 2010 (ePub)

Investing in Real Estate With Lease Options and “Subject to” Deals, 2005 (ePub)

Books, Videos, Research Reports & More

The resources below are available for loan through Information Services. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Information Services at 800-874-6500 for assistance.

Who Says You Can’t Buy a Home! (link is external) HG 2040.5 R25w (2006).

Field Guides & More

These field guides and other resources in the Virtual Library may also be of interest:

Sale-Leasebacks & Synthetic Leases

Seller Financing

Information Services Blog

Have an Idea for a New Field Guide?

Send us your suggestions (link sends e-mail).

The inclusion of links on this field guide does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this field guide complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.

Buyer’s Representation

by baldyguy

The latest thing being talked about is buyer representation, which has numerous related issues open to discussion. One that seems to inspire much angst on the part of agents is how much they should pay. But the issue that fascinates me is the one of value and what the buyer really pays…or doesn’t pay. The newest thinking says, in a nutshell, that the buyer pays for everything and isn’t getting equal value as it relates to agent representation. Also, that somehow the actual value of the home is affected by these issues. Ayn Rand taught me that if something doesn’t make sense, check my premises. That single concept has served me well in all aspects of my life.

If the buyer is nominally represented by his agent, and his agent is being paid by the listing agent, who was paid by the seller per the listing agreement, how was the buyer financially injured? If the buyer wishes to have absolutely separate representation, he can do that very simply. Sign a contract that says he will pay his own agent with his own money, and negotiate the home’s price separately. This results in surgically removing the seller’s agent from anything to do financially with the buyer’s agent. The buyer is now officially represented by an agent paid only by him, and owing allegiance only to him. There are now no gray areas.

My premise is simple. Real Estate representation isn’t rocket science. If a buyer wishes to divorce himself from a seller’s agent, and have his agent work only for him – signing a separate contract with a negotiated and well defined fee will do the trick.

So what’s all the fuss about? I’ve read thousands of words extolling the virtues of this or that approach on this subject. If separate buyer fees and representation are truly their main concern, why all the hand wringing?

In my practice I use buyer/broker agreements much of the time, but not always. If the client is new and asks me, I tell them they will be signing the contract with me, that I’ll not be paid by the seller or his agent, and that my sole allegiance in fact will only be to him. This means, I continue, that the price we negotiate will not include his fee. His fee to me will be paid on top of the price. I inform the listing agent up front of the relationship with my client. Everyone now understands the seller is paying their agent, and that I’m not participating in that commission. Obviously this results in the listing agent (though not always) cutting his commission in half.

Even though I was never on M.I.T.’s short list, I can understand this. Let’s stop debating something so easily understood, and get on with the real issues.

Next – from the broker’s viewpoint, should his fees be value based, or based upon his expenses? Yeah, I know, another silly question, but one being debated all over the place.