Recent Legislation Benefits Self-Employed

The Small Business Jobs Act was signed by President Obama on September 27, 2010. The legislation provided for tax breaks which included a new health insurance deduction for the 2010 tax year specifically for the self-employed.  In addition, loan provisions for the SBA (Small Business Administration) were extended until December 31, 2010.  Both of these benefits offer real estate agents the opportunity to realize substantial savings and provide financial assistance to an industry hit hard by the recession.

Self Employed Health Insurance Deduction – Up to $3500 in Savings

Self-employed individuals pay 15.3% of their net earnings which is known as the self-employment tax. The self-employment tax rate is the sum of 12.4% for Social Security (old age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance). The Social Security tax applies to the first $106,800 of net earnings in 2010; there is no ceiling on the Medicare tax.

If an average family (self-employed income) paid $14,000 for health insurance coverage then the 15.3% self-employment tax on earnings used to pay that premium would be $2142. Families with higher earnings and monthly insurance premiums could save as much as $3500. The new legislation (Section 2042) allows the self-employed to deduct this premium on their self-employment tax as well as their income tax. The rationale is that this tax savings can be re-invested in their businesses. For more information regarding this tax benefit go to Health Insurance Tax Break.

Real Estate Brokers and Agents Qualify for SBA Loan Assistance

The Small Business Jobs Act extended loan provisions for reduced closing costs and a 90% loan guarantee.  This provides incentives for both the lender and borrower to take advantage of the programs before year’s end.

Real estate agents and Brokers qualify as small businesses and can benefit by refinancing credit card debt and/or obtaining loans through the 7 (a) loan program.  The interest rates for these programs are substantially lower than credit card interest and is tax deductible.  Go to Loan Assistance for more information.

The Short Sale – Not Your Typical Real Estate Transaction

As a home buyer looking for value in the purchase of real estate you may find that a “short sale” property is your “best bargain”.  Understanding the process and working with qualified professionals will improve your chances of a successful transaction. Utilize the services of Realtors, attorneys, accountants, mortgage lenders and home inspectors as they all provide expert advice.

The short sale is not a typical real estate transaction.  You must understand that you will be negotiating a contract with the Seller subject to lender approval and with no guarantees that your offer will be approved.  In order to prevent foreclosure, the Seller may have only one opportunity to “sell short” and must have an offer that is likely to be approved by the lender.  The following guidelines will improve your chances of a buying and closing on a short sale listing.

Qualified Buyer

Have evidence that you are a qualified buyer as sellers can’t accept your offer.  Obtain a credit approval from a reputable lender or if a cash buyer provide proof of funds.  You must be qualified to purchase without selling an existing property.

Pre-Qualify the Listing

Sellers selling short typically have a time-line they must meet to avoid foreclosure.   If they have not communicated with their lender(s) and started the process, there may not be sufficient time to affect a sale. Virtual Homes real estate agents will obtain this information on your behalf.

1. Is the seller’s short sale package prepared for submission to the lender?
2. How many liens are on the property?  If more than one, what are they?  Is there a plan to satisfy all the lien-holders? 

To obtain a list of short sales and foreclosures go to NH Foreclosures, MA Foreclosures and CT Foreclosures.

Negotiating the Offer

The first step is to have your offer accepted by the Seller and you will be competing against other buyers.  Some real estate agents market the property substantially below market value to entice buyers.  Others price the property at the low end of fair market value.

Sellers and lenders prefer offers with fewer contingencies.

Earnest Money – Sellers may be hesitant to accept your offer with a low deposit.  Buyers can easily “walk away” from a contract with low deposits.

Home Inspection – be prepared to invest the time and money in the home inspection prior to lender approval.  A seller may not want to take the risk of allowing the inspection after lender approval.  If they do, they risk losing the buyer on the inspection issues and will not have time to sell the property prior to foreclosure.

Flexible Closing Date – once the lender approves the offer, they may require a “quick” closing.  You must be prepared to meet their conditions if you want to consummate the sale.

Subsequent offers – the listing agent must submit all offers to the Seller.  A contract with a higher sales price may have a better chance at being approved by the lender.  The lender will give the Seller direction as to submitting additional offers. 

Lender Approval

Lenders have no set formula that will determine the sales price of the property.  However, Freddie Mac (one of the largest secondary market lenders) has a target sales price of 88% of the broker price opinion (BOP).  Lenders will do their “due diligence” to substantiate the value of the property.

Have realistic expectations of the time-frame for approval as it may take between 30-180 days and property values can change.

Be prepared to lock your interest rate thru closing so that your mortgage commitment will be valid.

 Virtual Homes Real Estate – Experience the Future of Real Estate Today!

Co-ownership of Your Branch Office

These changing times bring opportunities to achieve personal and professional growth. Imagine a business relationship that combines your experience and knowledge with lead generation, technology, training, and support. Virtual Homes Real Estate seeks professionals who share the same values and vision for the future.

Virtual Homes is an innovative company that evolved from a merger between former RE/MAX franchises and a leading Internet marketing company. By combining experience and technology with exceptional training and support, we are ideally positioned to lead our industry in meeting the needs of consumers in this new real estate economy.

Our company provides home buyers and sellers with an interactive Internet portal that offers tools and dynamic information without commitment. Our Internet marketing system generates thousands of leads that are pre-qualified by the inside sales team for distribution to agents working from their home offices. We provide a network of 800+ virtual community websites, lead notification and management systems, real estate CRM and in-house training and technical support.  The system attracts career oriented agents that are proficient in providing exceptional customer service to tech savvy consumers.

Virtual Homes is a licensed Broker in 5 New England states and currently have 54 agents working in NH and MA.  We are in the planning stage for our new offices in western Massachusetts, Rhode Island and Connecticut.  We are seeking Realtors that are dedicated to a successful and profitable career in real estate through joint ownership of an office in your market.  This is not a franchise and does not require up front capital.  The growth of our company is dependent upon partnering with the right agents at the right time.   Together we are the future of real estate.

Please contact me, Fred Doleac if you are interested in discussing this opportunity.

The Manchester NH real estate activity in 2009 continues to indicate downward trends.  Both single family homes and condos sold declined as did the average sales prices.  DOM improved indicating that consumers are reacting quickly to well priced homes at the entry level.  The story for 2009 was the $8000 tax credit for first time home buyers which stimulated the lower end of the market and the volume of foreclosures listed and sold.  Condominiums have been hit hard with financing restrictions, high foreclosure rates and the affordability of single family homes.

Manchester Homes Sold

The average sales price dropped -10% from $220,512 in 2008 to $200,215 in 2009.  Single family home sales increased 6% to 663 units from 623.  The days on market improved from 96 days to 86 and the sales price to list ratio increased to 98%.  Peak values and transaction sides peaked in 2006 with 732 homes sold at an average sales price of $259,924.

Manchester Condos Sold

Manchester NH condos sold dropped -20% from 277 units sold in 2008 to 255 in 2009.  Average sales prices dropped -15% from $165,658 to $140,641.  Days on market showed an improvement from 166 days to 126.  Peak average selling prices were obtained in 2007 at $170,926 and unit sales high point was 596 units sold in 2006.

Information was obtained from the NH MLS system (NNEREN) and is not guaranteed to be accurate.  Current Manchester NH real estate listings can be viewed at Manchester NH real estate and homes for sale.