It’s not what you want to hear, but Victoria Gillespie of REALTORS® Federal Credit Union, a division of Northwest Federal Credit Union, recommends you put away half of each commission check for taxes and a short-term reserve account.
In the second video in our series on financial planning for real estate professionals, called Your Money Matters, Gillespie, the credit union’s director of business development and a former banker and real estate practitioner, says smart money managers set aside 30 percent of each commission check for taxes and 20 percent for reserves, with the goal of creating a six-month reserve fund as soon as possible.
That means if you earn $5,000 in commissions on a home sale, you should think of it as $2,500 in commission income. “I know that sounds like a dramatic number, but I think it’s important practitioners see it that way,” says Gillespie in the video.
Thr fact is, you’re going to pay about 30 percent of your income each year in taxes, and it’s a lot easier to pay that by setting aside money each time you get paid so, come tax time, you have the money available. And on the reserve fund, that’s so you have a comfortable cushion of income for those months when you close fewer transactions than you need to pay your bills.
REALTOR® Magazine started its video series a short while ago to help bring you some practical tips from your credit union, whose professionals are familiar with money management best practices.
Although setting aside half of your commission check is easier in theory than in practice, the credit union has some accounts you can set up that take some of the sting out of it, starting with its basic savings account. There’s no minimum balance and the interest you get on your money, although modest in today’s ultra-low interest rate environment, is nevertheless quite a bit higher than what you would get in an equivalent account at a bank. “We shop what banks are paying and the interest on our regular checking is five times higher than other institutions,” she says.
Once you have a six-month reserve built up, you can consider higher-yielding savings products, including certificates of deposit and money market funds, which require you to lock up your money for defined terms.
NAR and many lawmakers in Congress are pushing for a time-out in the federal government’s efforts to eliminate flood insurance subsidies over time and phase in premium rates that reflect properties’ actuarial risk of flooding. NAR’s Call for Action this week to its members is part of that effort.
But it’s not just hikes in insurance premiums that’s fueling this push by NAR and others to slow things down; it’s the sometimes wildly divergent and uncertain way insurers are assessing new premium rates. As NAR Past President Moe Veissi said in eye-opening testimony before a House subcommittee yesterday, property owners are sometimes getting half a dozen different premium quotes for their property, sometimes even from agents in the same company.
“The law has proven complicated and difficult to implement,” Veissi said in his testimony.
The former association president shared reports from NAR members across the country of some property owners seeing big increases in their flood insurance costs even though their property has never flooded and in some cases their community has never flooded or has instituted community-wide flood mitigation efforts.
The confusion in the market is having dire consequences on the ground. “We’re seeing for-sale signs today that say ‘No insurance impact on this property,’” he said. “That tells us very quickly that folks are making determinations at the point of impact on property that they would normally have bought.”
He also shared findings from a Rand study that home values are declining by $10,000 for every $500 increase in premiums.
Bottom line, there was broad acknowledgement among lawmakers and the witnesses at the hearing table that the flood insurance program must move to a premium structure that reflects the actuarial risk of flooding. But at the same time, a lot needs to be done to ensure that the needed change happens in an appropriate way. And that’s what the NAR-backed, bi-partisan legislation that’s under consideration in Congress would do.
The legislation is called the “Homeowner Flood Insurance Affordability Act,” H.R. 3370 in the House and S. 1610 in the Senate, and It would pause some program changes while the federal government gets a handle on how the new rates are to be set and it looks at the affordability impact of the new premium structure. Importantly, it would also help property owners take action if they feel their premium changes aren’t accurate.
You can get more info on the Call for Action at the REALTOR® Action Center.
Kicking off the 2013 REALTORS® Conference & Expo, members of NAR helped build 28 homes with Habitat For Humanity of Greater San Francisco on Wednesday, Nov. 6.
“These homes are a huge asset development for families,” said Phillip Kilbridge, executive director of Habitat for Humanity of Greater San Francisco. “They can use it as a stepping stone for more education, stability, and deep engagement in their community.”
R. Brian Matza, broker and contractor with Nob Hill Realty, remembers running drills during his days as a firefighter along this narrow property adjacent to a highway in San Francisco’s Oceanview-Merced-Ingleside neighborhood.
“Because of the high housing costs in San Francisco, the affordability index is really difficult, especially for entry level,” said Matza, a San Francisco native. “Now to see this coming in here, it’s a fantastic thing and I’m happy to be part of it.”
San Francisco’s median home price hit $1 million in April – its highest level in six years, according to the San Francisco Association of REALTORS®. Kilbridge says it has become increasingly important to provide opportunities for lower income families to own a home.
Sitting around a table at the REALTORS® Conference & Expo in San Francisco, the four women seem more like they’re at a sidewalk café trading war stories about life, love, and happiness than at a business conference. The first thing that comes to mind — clichés be damned! — is a scene from “Sex and the City” where the girls are at their favorite diner, giggling over the frivolities of each other’s sordid lives. Someone might be Carrie, someone might be Charlotte — probably no one would claim to be Samantha.
What brings these women together is their love and admiration for one another, and it’s fitting that here they sit at the same venue that launched their great four-way friendship: the convention. Continue reading »
It’s what happens between sessions at the REALTORS® Conference & Expo that makes the experience of NAR’s biggest annual event for many attendees. New friendships budding, business connections made, memories added to the bank. And one practitioner at the San Francisco convention this year logged one of the biggest memories of all: Getting married — legally, finally — to his spouse of nine years.
Brian Copeland, GRI, ABR, CRS, an agent at Village Real Estate Services in Nashville, Tenn., exchanged vows with Greg Bullard, a pastor, at San Francisco’s Fay Park near Lombard Street on Tuesday. And the REALTOR® community was there to rally around the couple and their 2-year-old son, Micah Copeland, to show their love and support. Continue reading »
Chris Anderson, former editor of Wired magazine and author of “Makers: The New Industrial Revolution” (Crown Business, 2012), who presented at the REALTORS® Conference & Expo Friday, predicts that you’ll carry a small drone in your bag, and when you’re taking on a new listing, you can turn on your drone, push a button, and it will orbit the building or home, mapping and creating a 3D model for you.
Anderson, who founded 3D Robotics, a company that makes GPS-guided aerial drones used for mapping and photography, says that in just three short years he went from being a dad messing around with his kids, Googling “autopilot” and building remote control devices, to owning and operating a multimillion-dollar aerospace company.
Anderson also discussed the changing face of industrial and warehouse real estate in light of the growing “makers movement.” Today, manufacturers are relying on robotics to create products in fields ranging from synthetic biology to furniture. Computer screens and white-collar programmers have replaced smokestacks and assembly lines.
“The reason you’re able to have 3D printers on your desktop is the components are so cheap that regular people are able to afford them,” Anderson said. “It will be regular people doing extraordinary things.”
Organized by volunteers, Real Estate Bar Camp is a completely unstructured day of sessions led by anyone who steps up — on any topic. Here’s how it works: REBarCamp attendees volunteer to lead a session on whatever topic is of interest to them and form roundtable discussions with other attendees. There are no individual presentations; a discussion group can pop up at any moment.
“We really build a conference on the fly,” explained REBarCamp founder Andy Kaufman, e-PRO®. The Berkeley, Calif.-based Better Homes and Gardens Mason-McDuffie real estate agent told meeting attendees at the REALTORS® Conference & Expo in San Francisco on Thursday that REBarCamp “is open source — you guys do it yourself.” Continue reading »
Submitted by PeopleClaim.com
You know that customer testimonials are important to your business, but do you know just how important they are? Consider this: 71 percent of online consumers say positive reviews make them more comfortable buying a product, according to a survey by PeopleClaim.com, a Web site that fields and publishes consumer complaints about all types of businesses. What’s more, 82 percent say online reviews are “extremely valuable” or “valuable” when making a purchasing decision.
This infographic from PeopleClaim.com illustrates how online reviews influence consumers’ buying behaviors and decisions. One thing worth noting upfront: Consumers are willing to pay more for a product that gets an “excellent” rating versus a “good” rating, according to the survey. Continue reading »
NAR President Gary Thomas in testimony before the Senate Banking Committee this week again took aim at a proposal floated by a federal regulator to reduce the size of loans that Fannie Mae and Freddie Mac can handle. Although details are still to be released, the Federal Housing Finance Agency has said it wants to reduce these limits, which in high-cost areas can go as high as $625,500. Reducing this would shut the door to reasonably priced mortgage financing not just for middle-class households living in expensive areas, but for households everywhere, because the regular loan limit would be affected as well. “This isn’t just a high-cost area problem,” Thomas said.
Sen. Robert Menendez (D-N.J.) said he recognized the sweeping nature of the impact. “So, reducing loan limits also hurts existing home owners,” he said.
Thomas also urged lawmakers to back bi-partisan legislation, the “Housing Finance Reform and Taxpayer Protection Act of 2013,” S. 1217, introduced by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.) , because it would reform the secondary mortgage market while leaving in place a federal backstop, an NAR priority.
“It’s extremely likely that any secondary mortgage market structure without a government guarantee will foster mortgage products that are more aligned with business goals then with the best interests of consumers,” he said.
It was Thomas’ second appearance before the committee in three weeks. His earlier appearance, at the height of concern over whether Congress would increase the federal borrowing limit before the U.S. Treasury ran out of money to pay the government’s debts, was timely, to say the least. Sen. Heidi Heikamp (D-N.D.) credited Thomas’ earlier testimony for changing minds at a very tense time. “Mr. Thomas, I think your testimony on the debt ceiling and what it would mean for borrowers had a huge impact,” she said. “I think we were able to change public opinion.”
Sen. Sherrod Brown (D-Ohio) also thanked Thomas for his earlier appearance as well as the input REALTORS® provided when he met with them last week in Ohio. “I spoke with a number of your members—the Columbus Board of REALTORS®,” he said. “About 100 of them were there, just to discuss some of these issues.”
For Thomas, the key to his testimony was to keep lawmakers focused on how all the moving parts of mortgage finance reform that Congress is looking at fit together. To that end, he urged Congress, for the short term, to look closely at FHFA’s plan to reduce loan limits without losing sight of the long-term need to reform the secondary market in a way that maintains a federal backstop.
Access Thomas’ written statement.
To get a good picture of why it’s so important for a continued federal role in the mortgage market, view remarks by Ginnie Mae President Ted Tozer, who in a conversation with NAR Vice President Joe Ventrone explains the role the guarantee plays for global mortgage investors.