“We are at our very best, and we are happiest, when we are fully engaged in work we enjoy on the journey toward the goal we’ve established for ourselves. It gives meaning to our time off and comfort to our sleep. It makes everything else in life so wonderful, so worthwhile.” — Earl Nightingale: Was a motivational speaker and author
NEWS & HEADLINES
Fannie Mae recently sent out requirements delineating what 1003 information must be provided to the agency during loan delivery, including the loan origination company’s (not the branch, or state-level) unique NMLSR identifier: FannieNMLSR
Factory Orders increased 3.1% in February, the biggest gain since September 2006, after an upwardly revised 1.4% gain in December. Ex-transportation orders advanced 0.7%, propelled by a jump in demand for non-durable goods that may reflect higher commodity prices.
Fed Policy Makers Signal Abrupt End to Bond Purchases in June. Federal Reserve policy makers are signaling they favor an abrupt end to $600 billion in Treasury purchases in June, jettisoning their prior strategy of gradually pulling back on intervention in bond markets.
Freddie Mac: 30-Year Fixed-Rate Mortgage Drops for Third Consecutive Week, with the 30yr fixed rate averaging 4.87%, down from 4.95%. The 15yr FRM averaged 4.15%, down from 4.22%. the 5YR ARM averaged 3.72%, down from 3.8%,and the 1yr ARM averaged 3.23%, down from 3.4%.
Rates have been volatile for the last few days. On Wednesday the 10-yr worsened by about .375 and closed with a yield of 3.46%. ADP numbers, Jobless Claims, Productivity numbers, the announcement of next week’s 3, 10, and 30-yr auctions, MBS prices worsened Wednesday and again yesterday (losing roughly .5 in price).
The markets are focused on the same things that are garnering headline news: higher oil prices, the ongoing turmoil in the Middle East and Africa, and comparisons between Charlie Sheen’s and Moammar Gadhafi’s rants. The favorable economic news helped stocks yesterday, and after yesterday’s closing 10-yr yield of 3.57%, one might expect a little bounce with the unemployment data but with oil still moving up, and now over $103 per barrel, things are dicey.
Today we learned that Nonfarm Payrolls for February were up 192,000, about as expected, and there were back-month revisions of over 50,000. Private payrolls were up 222,000, and the headline unemployment rate dropped to 8.9%. The fixed-income markets didn’t really do much on the news, with the 10-yr sitting around 3.56% and mortgage prices not moving much from Thursday’s close.
TEN SECRETS TO SAVING
Here are some tips you can share to your buyers to help them with saving.
Cheap is chic, frugality is in fashion, and Americans have sworn off their spending addiction. In a replay of 2010, their top resolution for 2011 is to save more money. Americans fell off the wagon. This year, consumers aim to save an average of $2,600, a far cry from their average goal of $14,000 in 2010. The reason: many of them didn’t meet their ambitious savings target.
- Take money off the top of your salary for retirement or some other goal.
- Start now. Don’t wait till you make more money. The more you make, the more you spend. Start small.
- Check out the How much will my savings be worth? calculator to see how even $100 per paycheck will add up over time.
- Write down your goals, which makes them more real. Be specific. “Saving for the future” is admirable but vague. Pledging to save $2,000 for a vacation to Cancun is likely to get you there.
- Set up an account for each goal – education, vacation, car, computer – or for large, recurring expenses, such as insurance premiums.Deposit your paycheck into your savings account and transfer money as you need it (don’t exceed the number of transfers you are permitted per month).
- Subtract your credit purchases from checking right away so that you’re not surprised when you get the bill.
- Toss spare change into a glass jar on your desk or dresser and watch your money grow. I once ran into a fellow who told me that he makes a habit of squirreling away spare change and found money (like a quarter you may pick up while standing in line somewhere). His stash adds up to about $1,000 per year.
- Give yourself an instant reward. Each time you brown-bag your lunch instead of eating out, toss the savings into your cash jar.
- After you pay off a loan or a bill, keep writing the check and send it to a savings or investment account.
- Head start. Getting into the savings habit is a matter of mind over money. But it helps to have some cash, too. Fortunately, most of us will get a head start this year with the 2% cut in the payroll tax – which could mean as much as $2,136, depending on your income. Check out this article that shows you how to save $50 a day on everything from mutual fund fees to your next glass of wine. That adds up to $18,250 per year.
OVERLOOKED TAX DEDUCTIONS FOR REAL ESTATE PROFESSIONALS
Every year, thousands of real estate professionals pay more tax than they need to because they fail to take all the deductions to which they are legally entitled. The Internal Revenue Service will never complain if you don’t claim all the deductions you can. It’s up to you and your tax preparer to figure out what you can deduct, keep proper records, and claim deductions on your return. Every dollar in deductions you fail to take can cost you 40-50 cents in extra taxes — money the IRS is happy to keep.
Two of the most often overlooked deductible expenses arise from doing business from your home.
Home-office deduction
Probably the No. 1 deduction real estate pros miss is the home-office deduction. Many erroneously believe they don’t or can’t qualify for this deduction. Untrue. Almost any real estate agent or broker who works as an independent contractor can qualify for the home-office deduction.
You can qualify for this deduction if you have a home office that you use exclusively and regularly for administrative or management activities for your real estate business, and you have no other fixed location where you regularly perform such activities.
Administrative and management activities can include, but are not limited to:
- keeping books and records
- setting up appointments
- paying bills
- maintaining client databases or contact lists
- reviewing real estate publications; or
- engaging in real estate continuing-education activities
Office expenses in the home
Many real estate pros believe that they can’t deduct any expenses they incur while working at home unless they qualify for the home-office deduction. This is a myth that has cost many real estate pros valuable deductions.
Even if you don’t qualify for or take the home-office deduction, you can still take tax deductions for expenses you incur while doing business at home. These are expenses that arise from the fact that you are doing business, not from the use of the home itself. These include:
Telephone Expenses (You can’t deduct the basic cost of a single telephone line into your home, but you can deduct the cost of long-distance business calls and special phone services that you use for your business (such as call waiting or a message center). You can also deduct the entire cost of a second phone line that you use just for business, including a mobile phone.)
Business Equipment and furniture (The cost of office furniture, copiers, fax machines, and other personal property you use for your business and keep at home is deductible, whether or not you qualify for the home-office deduction. If you purchase these items specifically for your real estate business, you can expense them (deduct them in one year) under Internal Revenue Code Section 179, or depreciate them over several years.)
Supplies (Supplies for your real estate business are currently deductible as an operating expense if they have a useful life of less than one year. Otherwise, you must depreciate them or expense them under Section 179.)
HONESTY IS THE BEST POLICY
For years, many buyers weren’t honest about their income and some loan officers didn’t care. The loans were bundled by Wall Street and sold to investors who were told anything but the truth about their value. For years, some real estate professionals prodded appraisers to move that appraisal up “just a bit” and most sellers thanked them for it. The housing bubble was created on a bed of dishonesty. I’m not saying that any group was malicious in their intent. Everyone probably believed that it would all work out in the end. But, it didn’t. Instead, we were faced with the largest housing collapse since the Great Depression.
A market built on so many half-truths couldn’t continue to grow. Its foundation was rotten. Governmental regulation has forced most parties to rethink the way the housing industry can survive. A person given a mortgage must now prove they have the capability to repay it. An appraiser is held to a higher standard as they determine values. Has the pendulum swung too far? Perhaps. But, something needed to be done.
That brings us to today. Let’s make sure that we demand honesty from real estate professionals in everything we ask them to do. Buyers must insist that the loan officer determines the amount of mortgage they can actually afford. Sellers must make sure they are given an honest estimate of their home’s value in today’s market when listing. Remember to reward the person who has the courage to tell you what you need to know not the one who is telling you what you want to hear.
Honesty is the only thing that will bring back the housing market.
WATCH YOUR WORDS IN LISTING ADS
The wording you choose in the ad for your listings is important if you want it to grab the right buyer attention.
A study by the University of Guelph in Ontario analyzed the wording of more than 20,000 Canadian home listings and found that a listing’s phrasing can influence a home’s sale price as well as the length of time it took for the home to sell.
For example, when the listing’s ad incorporated words like “beautiful” – rather than “move-in condition” – the sale price was influenced by 5 percent or more, as much as $15,000 on a $300,000 house.
Other words that reflected “curb appeal” or the attractiveness of the home, such as good neighborhood or excellent upkeep, also were found to help the property sell faster than homes that were described as “value” and “price,” the study found.
“There’s usually something that can be said in a positive way which will force a buyer reading an ad to see opportunities,” says Catherine Lindstadt, a licensed associate broker at Prudential Douglas Elliman Real Estate. “It’s important to help a seller elaborate on their home’s assets with details and to give the buyer a visual.”
Instead of saying “spacious,” she prefers key words such as “open floor plan,” “vaulted,” or “high ceilings.”
A University of Texas at San Antonio study found in analyzing agents’ comments left on the Multiple Listing Service that comments that state facts about a home also are associated with increased selling prices.
“Buyers are attracted to amenities that can be verified–new roof, new carpeting, updated kitchen, beautiful landscaping, golf course community, lakefront, waterfront, gated community,” says Marie Montchal, a licensed associate broker and senior vice president of relocation and ancillary services at Daniel Gale Sotheby’s International Realty Relocation Center.
But beware of the word “new,” she says. “I know that ‘new kitchen,’ ‘new bath,’ ‘new roof’ and ‘new windows’ is inviting, but I have a guideline of two to three years, or ‘newer’ if it’s older than that,” she says.
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