The New Normal Seems Workable

When we have listings, we have calls, leads, and showings.  It's that simple.  It's particularly true with industrial space, where no new product has come onto the market in decades.  Docks, overhead doors, and clear span are all important, but the most necessary?  You guessed it--location, location, location.  We are within one day's drive of a third of the US population.  Ecommerce is at an all-time high.  Shipping and delivery are key success factors in that industry.

We didn't know what to expect--not as though anyone else did, either--when the pandemic set in.  We knew very little about the coronavirus, and less about the prognosis for its effect on the economy, except that we knew it wouldn't be good.  Lockdown began, and we all held our breath.

Now, as Connecticut becomes the last state in the nation (along with Massachusetts) to begin to reopen, we have a different point of view.  Although our unemployment is sky high, and our economic damage great, the real estate market is surprisingly robust.  Lack of supply is one reason, but the longer term looks good as well.  Some businesses are doing better in the telecommuting economy.  Many are bouncing back.  The outlook is far less sanguine for retail and big office buildings, but people plan to work, live, and play in the future.  The new normal, as it turns out, may not be all that different from the old normal, from a real estate point of view.  Yes, open floor plans will do a dive, many restaurants will not survive, and big buildings dependent on elevators may suffer, but other trends will emerge.  Small cities and suburbs will thrive.  Open space will raise value.  Banks will make loans.  Cash will leave the stock market, and go into real estate.  Elective surgery and medical visits will begin again.

I'm writing this on a staggeringly beautiful spring day in New England, and maybe that's making my viewpoint sunnier.  But maybe not--people are resilient, and so is America.  We can't forget the motto of the National Association of Realtors--"Under all is the land".  And it's still there.

Tax Effects Uncertain

Pundits spent a lot of time last year, trying to predict what buyers would do in light of the many tax law changes.  People in Connecticut were especially nervous, given our status as a state where changes in the treatment of SALT (state and local taxes) would have a big effect.  Here we are, a whole tax year later, and it's hard to say for sure what happened.  In my own case, many different laws were applied or eliminated, and my total taxes in the end were so close to what we paid last year that I questioned whether we could have signed last year's return again.

On the residential side, where we really thought capping SALT deductions would cause high-end prices to fall, the opposite seems to be happening.  Properties along the coastline especially are flying off the market as quickly as they come on.  Perhaps it's supply, which has declined, perhaps it's the increasing number of years since the last big hurricane, or perhaps people are generally doing well, despite what they may tell pollsters who call them.

Anyway, if you've been thinking that there are no buyers for your properties, think again.  They are out there, and they are buying.

Looking Up For 2019?

Our Commercial Department meeting this week was as full of listing and selling reports as we've seen in several years.  Agent after agent reported listings, and then stated that they were under contract.  This was true regardless of the part of the State, the type of property, and its use.  It seemed to us as though the first of the year brought a rush of people deciding that they had vacillated long enough.

To some extent, sellers planning to leave the State will also cause this kind of movement, so it may not all be good news, but it sure felt like it to us.  Even the suggestions from others around the table were positive, as to the likelihood that things would sell.  And this was all true despite the outside temperatures at 15 below with the wind chill, on the morning of the meeting. 

No one would be happier than we would be, if Connecticut were truly seeing a new beginning.  Between investment from those priced out of New York and Boston, users finally pulling the trigger on needed space, and startup businesses, there's a lot to spark the market. 

If you are a seller, consider listing now, while demand is strong and supply has not caught up.  If you are a buyer, don't hesitate.  Remember, he who hesitates is lost. 

How Do Real Estate Agents Get Paid?

I've started writing about common questions that buyers and sellers have, and, believe it or not, how we get paid is still one of them.  To understand the payment process, we first have to go over the legalities of licensing.  Each real estate company has one broker for legal purposes.  At Pearce, for example, I'm that person.  All agents at Pearce "hang" their licenses with us, although some of them are salespeople (who must work for a broker), and some are brokers themselves (who could work independently or can work for another broker).  Over 90% of real estate companies across the country have fewer than ten agents, and the broker sells him- or herself.  That makes Pearce Real Estate one of the largest firms in the State, and across the country.  The principles of agency, however, are the same regardless of size.  It's also useful to note what Realtor designates (and it needs a trademark sign, which is above my pay grade on a computer!):  It means that the company, and therefore all of its agents, belong to the National Association of Realtors, agree to abide by its Code of Ethics, and can participate in the Multiple Listing Service (MLS).  Most local firms are Realtor firms if they sell residential real estate, and, increasingly, commercial firms are not. We are, and we handle both types of property.

When a seller signs a listing agreement, or a buyer signs a buyer broker agreement (and those two contracts are basically equivalent), they sign with the broker in charge.  Only the broker in charge sets the rules--commission rates and terms--or can legally change or cancel the agreement.  Most compensation is offered through the MLS:  When a listing is posted there, it has a BBC (Buyer Broker Commission) offered, and the listing firm is required to pay that amount to the broker who represents the buyer, unless a change is agreed to by both firms, or firm if it is a sale with both brokers at the same company (which we call an "in-house" sale).   In order to have an in-house sale, both buyer and seller must sign a Dual Agency agreement.

When the property closes,in most cases, the closing attorney makes out a check or checks to the brokerage firm--checks cannot be made out to individual agents.  Firms differ widely in the way they compensate agents within their firms, both in the percentage of the check that goes to the agent, and in what expenses they pay toward the transactions.  In addition, some (usually national) firms also charge buyers and sellers "transaction fees", which are paid on top of the commission, and go only to the real estate company. In some cases, the commission is divided evenly between the listing side of the transaction and the selling side.  Increasingly, the listing firm keeps a higher amount, and offers a BBC that is less than half of the total.

Agents are legally independent contractors, so they don't get a salary, or a regular paycheck.  They earn money only when property closes or rents, and they share that with their firm.  It used to be that the firm got half and the agent got half, but now it can vary.  Some companies pay higher amounts (sometimes much higher percentages) to the agent, but often charge them for their desk, their postage, their copies, and their marketing.  Many transaction-related expenses are borne by the agent personally.  If he or she takes you to lunch, that comes out of his or her pocket.  If a problem arises during the selling process, and is paid for by the broker, that is also often coming out of the agent's share.  If you were referred to your agent or agency by another real estate agent or company, either here or somewhere else, that agent's firm can be receiving up to half of the total amount paid.

If all of this is making you feel as though the poor agent is at the bottom of the heap, you could be right, especially if you don't end up selling or buying, and they get nothing for all of their work.  What my goal is, however, is to make you understand what they make, and when, and to help you appreciate their excellent efforts on your behalf!

We're at the Witching Season

It's not only Halloween next week, it's the best time to buy property.  Sellers who are ready to move on, and who may have maintenance costs on empty buildings, or tax consequences if they don't close by the end of the year, are at their most reasonable.  Buyers may have their own deadlines, and the end of the calendar year provides a natural one for most.  With motivated parties on both sides, we often find that sales come together more quickly at this time of year.  Even bankers and other professionals have reasons to want to move the process along without delays. 

Buyers should use this scenario to push for a good result, especially by offering to close quickly.  If you haven't bought or sold real estate recently, you may find the experience more like waterboarding than like waterskiing, so be sure to answer all calls and requests for documents right away.  Don't think that people will back down on requirements--many times they have no control over certain items. 

Sellers need to heed the same advice--you are not in control here, and that may be hard to stomach.  Just gird yourself for some bumps in the road, and think forward to the holiday season, and the nice vacation you'll be able to take when you've gotten through the closing.  Remember that the buyer may not be driving the bus, either, and don't assume that s/he is trying to take advantage of you.  See the above comments and think about your own buying history, especially if you have borrowed money in the past ten years or so. 

I'm presenting the worst case here, and often it can be much smoother.  Whether it is or it isn't, almost everyone is happy in the end that they got through it, and that the property changed hands.  Keep that end goal in mind, and get serious about property transfer in the last quarter of the year.  You'll be glad that you did.

The Next Big Thing: Opportunity Zones

As part of last year's Tax Act, there is a new way that investors can use their money to minimize taxes and invest in real estate.  Opportunity zones have been created around the country, and there are 72 of them in Connecticut, with 7 of those in New Haven, 7 in Bridgeport, and 10 in Hartford.  People can substantially rehab or build new structures in those zones--or even invest in operating businesses--and postpone taxes or even have them forgiven, under certain circumstances.  Residential and commercial real estate are both covered.  Much of the program is similar to the 1031 exchange option that has been around for years, but is broader, if the investment is in those particular census tracts.

We've been told that even accountants and lawyers may not be up to speed on this investment potential, because only recently have the zones been finalized.  You can find the Connecticut interactive map on the www.ct.gov site.  Because the rules are specific and unforgiving, it's best to check with tax professionals before buying, but looking can start immediately!  It isn't that often that we have something so new to share, and we're glad that real estate is included.

The First Two Weeks

There seems to be a persistent practice in real estate of "testing the market" with a price higher than what the agent believes that the property will bring at closing.  Sometimes there is an agreement that the price will be lowered after some stated period, often thirty days.  Agents often feel that sellers become wedded, however, to the original listing price, and forget completely that they were told that a lower price would be more in line with market expectations.

While testing the market might seem like a reasonable course of action, especially if there is a clear understanding up front that the price will be lowered in x days if not enough action, or an offer, is generated, those of us in the industry should know better. We now have access to all kinds of information that tells us who looks at a listing, when they search, and how (with what device).  We know popular hours, phrasing that captures attention, and click-through rates by property.  We can see whether they looked at it, saved it, forwarded it, or contacted us about it.  Administrators like me get a copy of every email inquiry sent to an agent on certain search engines and platforms.

And what do we know from all of that?  We know the power of the new.  Overwhelmingly, the greatest interest in a property comes in the first two weeks after it gets listed, whether it is commercial or residential, and no matter the price or location.  Some properties clearly generate more activity than others, but always get the most attention early.  Sometimes that is because prospective buyers have signed up for notification alerts, so that a new listing will show up in their emails.  Many times it is because the buyers themselves look on a regular basis, and click on anything that they haven't seen before.  The end result is the same:  They gravitate toward the newest entries.

So it's easy to see the problem with testing the market.  Your property gets the most exposure and the greatest number of views at the original price, which is higher than the agent, and perhaps even the seller, thinks is the true selling price.  Agents often talk about how much higher the likelihood is of securing a buyer in the first two weeks after the listing comes onto the market, but, in order to secure the listing, they also often sabotage that chance, by using the most useful marketing time to expose the property at the wrong price.

We know that buyers today know a lot, and often as much as agents or sellers, about the value of properties, through comparisons of available inventory, and market knowledge gained online and elsewhere.  They aren't going to overpay, and many aren't going to potentially waste their time making offers that will be refused.  They concentrate instead on properties that are listed at compelling prices, which suggest that they will sell quickly.  That motivates buyers to make speedy offers, at prices near, at, or above the listing price, especially if they see that there is a lot of activity at open houses, or with showings.  It's better to accept the reality that buyers know value, than to think that serving up higher-priced listings will change their minds about the correct price.

If there is one takeaway from this, it should be that sellers need to ask agents this question:  What price do you believe that my property will close for in the end?  Then list as close to that number as possible.  And enjoy the attention your property will receive.

Think Broadly About Investment Property

If you own property that you are using, but would like to free up the cash you have invested in it, consider the potential for selling and leasing back.  We are seeing many investors in our market, looking for places to put stock market gains, proceeds from other real estate sales, or just extra liquidity.  They are perfectly willing to buy commercial rental property, but they want it filled. If you are willing to sign at least a five-year lease to stay where you are, you have a good chance of finding an owner for your building.  That will allow you to expand, deploy the funds elsewhere, or just diversify your own portfolio.  Even if you buy another property elsewhere, or of a different type, you have spread your risk farther.

We have seen many downsizing baby boomers who are willing to sell their big homes and rent apartments, often in cities.  Now that the stigma of being in a rental property has all but gone away in the housing market, why not use the same theory in the commercial sector?

We're Turning 60!

This week is Pearce Real Estate's 60th anniversary, and we're celebrating!  My father founded the company in 1958, after a 20-plus year career at the A.C. Gilbert toy company (now turned into artists' studios on Peck Street in New Haven).  Perhaps selling erector sets made him long to sell real buildings, and, early in his career, he actually sold the Gilbert building, after the company was downsized and sold.

Our original location, on State Street in North Haven, has been doubled twice, and we are still headquartered in that building today.  Over the years, we spread our territory, first to the Shoreline, and then to other commercial locations in Greater Hartford and in Milford, but we always have maintained our core principles of local independent real estate expertise and community service.  All eight offices today are filled with dedicated professionals who pride themselves on knowledge and integrity.

We'd like to think that we have indeed made Connecticut better over our 60 years in business.  In addition to providing thousands of hours of human service, and millions of dollars, to all kinds of non-profit organizations around the State, we have changed its landscape.  We have developed housing around the Greater New Haven region for most of that period.  With Don Lippincott, my father developed first an industrial park at Exit 10, and then what became in effect a regional mall at Exit 9.  The latter involved building a road and bridge, which is now called the Herbert H. Pearce and Donald B. Lippincott Commemorative Bridge, and leads to Home Depot, Target, and many other destinations.

His capstone project was New Haven's first mixed-use development, known as Whitney Grove Square.  It has shopping, office, residential, and parking at one location, with a bigger garage across the street. It was instrumental in moving people up from the Green to Whitney Avenue and Grove Street.  Buyers lined up through the night to buy the condos when they went on sale in 1986.  Many residents of the region now live in the heart of downtown New Haven, but it was unusual at the time.

We're proud of history, and of the perseverance that it has taken to survive and thrive for all of those 60 years.  We're prouder still of our associates, current and retired, who allowed us to do so.  And we are grateful most of all to the thousands of clients who have entrusted us with their sales, purchases, and rentals, for decades, and often for generations of the same families and corporations.  We look forward to the future, and know that it will be bright.

Lots of Churches

We have enjoyed becoming specialists in selling churches, as we have begun doing in the past  year.  It's a specialized business, and we are getting in gear with the various rules and regulations, and the special needs of congregations.  I recently returned from a meeting of brokers from around the country, and this is happening elsewhere as well.  Traditional denominations are consolidating their parishes, while new churches are springing up all over.

One of the challenges is to creatively reuse buildings that were designed when churches were the social centers of their neighborhoods.  Those neighborhoods have changed, and the way congregations operate has often morphed as well.  Sometimes it makes more sense to turn sanctuaries into housing or educational space.

Who would have thought that we would have moved from industrial and commercial brokers into agents who worked with churches, casinos, breweries, and marijuana facilities?  It's a brave new world out there, and we're proud to be in the vanguard.

Favored by Fortune

Those of us in Connecticut real estate would like to thank Boston and New York.  If they weren't so expensive, we might not be seeing the spate of sales that we've had in the past few months.  Although Connecticut faces fiscal and policy challenges, its location between two major centers of growth means that it benefits from the rise in prices seen in the two cities that bracket it.

Investment property is clearly drawing attention from buyers priced out of the Boston and NYC markets.  We are starting to see the same dynamic in demand for user properties, distribution facilities, and land.  Even home prices are beginning to reflect first-time buyers who cannot afford New York, just as we used to see.

It's impossible to predict how far the sprawl of metro Boston will end up going, but Connecticut will surely reap at least some rewards.  Fairfield County is already considered a suburb of New York, and that will continue.  If rail is upgraded, which we are all waiting for, that spillover will explode.  In the meantime, we can just be happy to see a great increase in commercial activity.

Stock Market Gains Turning to Real Estate

It appears that some of the money captured by investors in the especially bullish 2017 stock market may be redeployed into real estate in the near future.  Many people believe that we are near the end of this market cycle on Wall Street, and those who have the discipline to remove gains from stocks are seeking alternative investments.  Real estate is an obvious use for that, since cash has been returning virtually nothing over the past few years, and bonds have been lackluster in many cases as well. 

We are therefore seeing heavy demand for investment properties of all stripes, and are having trouble finding enough to fulfill the interest generated.  Our hope is that baby boomers who are often selling, relocating, or retiring, will put new buildings and parcels onto the market in the coming months, as it is more likely now that such offerings will sell.  Even users are more inclined to purchase, as they too are looking for a safer return.

The message here?  It's a great time to consider liquidating an underutilized or unwanted real property, and maybe a last chance to get into a new property at somewhat lower prices.

Two Recent Quick Sales

For those of you who think that it's impossible to sell an industrial building in Connecticut, we have good news!  Although it is often reported that manufacturing, and most industry, is dying in our region, industrial buildings are still desirable.  It may be that they are more often used as warehouse space, or flex space of some kind, or even converted to residential use, but they are being shown, and bought.

We have closed two buildings in the past week that went into contract within two weeks of being listed.  They were both industrial free-standing buildings, and they were in two different parts of our market, and they both attracted calls,showings, and offers right away.  They were priced correctly, and were in the "sweet spot" of 5,000-15,000 sf, with docks and overhead doors.

If you've been waiting to see what will happen, wait no more, because investors are also active in our market, and users won't want any extra competition.  Some people have needed more space for years now, and finally are pulling the trigger.  Others are opening new businesses or territories, and some are just betting on the come that prices will increase.

 It almost doesn't matter what reason you find most compelling.  It just matters that sellers know to list now, and buyers know to act now.  You'll be glad that you did.

Rentals Rule

With the recent news that three of New Haven's newest and fanciest apartment complexes have changed hands at eye-popping prices, it's clear that New Haven has a presence on the national scene for investment potential.  Investors from other places, mainly those priced out of the NY market, have entered our arena with enthusiasm.  Most are institutional investors, who are in it for the long haul, and that shows a confidence in our market that should help us all.

New Haven has, for several years, been at or near the bottom of national lists of rental vacancies, getting as low at one point as 1.5%.  The current situation is not all that different--less than 2% overall, with slightly over 3% vacancy rates at the upper end. Almost every high-end unit that has come onto the market in the past few years is occupied, something that many people doubted would happen.

The really interesting aspect, however, is that the units existing before are still full, and in demand.  In addition, the traditional graduate student housing on Orange Street and environs was expected to fall off in value, as more attractive options lured away those with money, but we haven't seen that occur.  There is still very strong demand for multifamily units in the East Rock neighborhood, as well as in other parts of the city.  Finally, despite all the rental interest, there are not enough condo units to satisfy the demand.  Part of that is because lenders are shying away from financing condominium projects, and that decreases new supply, but, whatever the reason, certain complexes are still in constant demand.

What all of this means is that the number of renters continues to grow.  Some are coming from increasing population, although New Haven is still far from its 1940s peak population.  Student demand is also growing, even as Yale continues to add to its own supply of housing.  We do have a large immigrant influx, and they may be pushing former renters into new areas and developments.  It also appears that New Haven may be achieving its goal of attracting young workers from around the State, who live here for the nightlife and cultural aspects, then commute by train or car to other environs for work.

There is also a heavy influence of baby boomer renters, those who previously owned large homes in the suburbs here or elsewhere, and are downsizing to rentals with amenities.  The traditional stigma against renting, when you could afford to buy, seems to be rapidly disappearing, and the convenience and portability of lifestyle is more important than the tax deduction to many.  We could easily see more of this group if their McMansions in the suburbs would sell more quickly, allowing them to move into the urban core.  While most experts believe that those with young children will eventually choose suburban venues, it does appear that walkability scores may continue to keep those families in cities longer.

What to tell investors?  It's a seller's market for multifamilies and developments, as well as for shovel-ready projects, although there are still opportunities for local people to guess the paths of gentrification, and use them to advantage.  But what about what usually follows?  We haven't yet seen the office and retail that so often accompanies housing, or even precedes it.  While office is years from recovery, and may never reach the pre-telecommuting heights, retail should still be in the wings as a growth opportunity.

And all of this is cause for New Haveners, and those in the region it supports, to rejoice!

Set a New Deadline

We are just coming off of what turned out to be a very busy December.  There were lots of changes, of course, with the new Federal tax bill, but it was--and still is--very unclear as to whether some things should have been done last year, or will be more advantageous to do in 2018,  Nowhere is that more true than in the real estate realm.

So, while uncertainty generally slows a process down, last month it sped up.  When I tried to think of why that would be, I realized that the end of a calendar year is a powerful and motivating deadline.  All sorts of people rush to finish projects and clear off their to-do lists before a year ends.  This year, despite all the potential changes, was no different, and even busier.

It made me conscious of the fact that the real estate market has been slowed down by people feeling that there was no pressure to make decisions.  Instead, they thought that properties would continue to be available, maybe even for less, into the foreseeable future.  Our job as agents was to try to create urgency.  That was often hard.

Therefore, our hope for next year is that all potential and current clients have a self-imposed deadline of some sort.  Whether their hope is to move, sell, or redeploy assets, everyone needs a finish line to cross.  Uncertainty can be problematic, but, if it lasts too long, more is lost by waiting than by simply moving on.

Greater New Haven, or Connecticut as a whole, residential, commercial, or investment, buy, sell, or rent--all are choices.  Just make one, and you will feel accomplished and relieved.

What Will 2018 Bring?

The latest Federal tax bill is only hours old, but pundits have been debating various proposals and exclusions for months.  People are frantically trying to figure out what it means for real estate, and what to do before the end of the year.  Unlike making a charitable contribution, it isn't quite so easy to implement changes in the next ten days.  However, we can see that some are trying.

It's unusual for us to still be getting offers and selling at this season, when thoughts often turn to shopping and partying.  This year, the phones are ringing more, and more transactions are coming together.  There aren't too many of those buyers and sellers who expect to close instantly, so it's a sign of something else, and we hope that it's a sign that people are moving on with their lives.

They hesitated during the presidential election, they hesitated during the first few months of Trump's term, but they finally seem to be inclined toward action.  Whether that's just life, or it's in reaction to the various proposals is hard to know, but I'd bet on the former.  I think we all know that mortgage rates are heading up, and that, in the end, that makes more difference to buyers than almost anything else in a purchase.

There hasn't been enough time for digestion of all of the parts of the tax bill, so we aren't even sure what 2018 will bring.  However, it is the time of the year for predictions, so here goes:  Connecticut is going to be hurt under the bill, and more people will leave the State in 2018.  Since not all of them will be able to sell their houses, they will reduce prices on big, expensive homes.  At some point, those properties will seem like a bargain to those who have lived elsewhere, or in times past, and they will start to move.  Some of them will be sold as second homes, since those mortgage deductions were preserved in the final bill.  Buying real estate will seem prudent compared to betting that the stock market will keep going up.

Millennials will be a major force.  They may need help, and we may see more sellers taking back money, as used to happen in different cycles of the market.  Big employers may turn to housing allowances, in order to attract employees from out of the area.

On the commercial side, we will see more and more 1031 tax-deferred exchanges, as those were preserved as well.  Investment real estate will be strong in Greater New Haven, where properties seem inexpensive compared to Boston and New York.  The State Legislature may actually listen to the new commission on fiscal health, and make changes that will cause business to expand or relocate here.

And our New Year's resolution here in Connecticut?  We will continue to do our best to sell our beautiful State and region, in little pieces.  Happy New Year to all!

Tax Reform Heads to the President

Tax Reform Heads to the President

Lawmakers in the House and Senate passed tax reform legislation today, paving the way for the bill to go to President Donald Trump for his signature. The President has said he intends to sign the bill by Christmas.

NAR worked with members of the House-Senate conference committee to help educate them on how to improve the final bill. After the vote, President Elizabeth Mendenhall issued the following statement:

"The results are mixed. We saved the exclusion for capital gains on the sale of a home and protected the mortgage interest deduction for second homes. Many agents and brokers who earn income from personal services will also see some significant new benefits in their business.

Despite these successes, we still have some hard work ahead of us. Significant legislative initiatives often require fixes to address unintended consequences, and this bill is no exception. The new tax regime will fundamentally alter the benefits of homeownership by nullifying incentives for individuals and families while keeping those incentives in place for large institutional investors.

That should concern any middle-class family looking to claim their piece of the American Dream."

Although the final tax reform bill is far from perfect, it is significantly better for homeowners than previous versions. That’s thanks to the efforts you made. REALTORS® generated over 300,000 emails and telephone calls to members of Congress over two Calls for Action and held countless in-person meetings with legislators, all of which helped shape the final product.

Last-minute changes to the bill include the following improvements:

• Capital gains exclusion. In a huge win for current and prospective homeowners, current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home. Both the House and the Senate had sought to make it much harder to qualify for the exclusion.

• Mortgage interest deduction. The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit. The House bill sought a reduction to $500,000.

• State and local tax deductions. Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000. Both the House and Senate bills sought to eliminate the state and local income tax deduction altogether.

• Pass-through entities. The bill significantly reduces the effective rate of tax on business income earned by independent contractors and income received from pass-through entities. This change will lower the taxes of many real estate professionals.

Next steps

Enactment of the bill does not end NAR’s effort to reduce the negative impact on homeowners. “REALTORS®’ work on tax issues will continue," says Mendenhall, "and we look forward to joining members of Congress from both sides of the rotunda on that endeavor.”

Access details of the bill.

Last Chance for 2017 Tax Moves

Many people would be surprised to hear how often we end up putting together transactions that save taxes for buyers and sellers in the last month of the year.  We have written contracts on Christmas Eve (once on the roof of a car), that holiday weekend, and even the week between Christmas and New Year's, with a closing that took place that same week!  Although everyone has the best of intentions not to procrastinate, things happen that are beyond one's control.  Often, it's a transaction that doesn't go through at the last minute, leaving a seller or buyer with no choice but to find another buyer or seller with no time to spare.

We certainly can't promise that every interested party will be able to complete a sale by the end of this month.  However, if you can pay cash, or take money back as a seller, and you are motivated, with a good support team to push through to a year-end closing, you just might make it happen.  Often such situations become infused with urgency at every turn, and can even overtake ones that started sooner.

So, if you have dreams of completing a transaction by December 31st, we're here to help!

What Makes a Good Real Estate Agent Great?

I've spent several hours over the past few days talking to past Pearce clients about their real estate buying or selling experiences.  It was so useful, and so gratifying, that I've decided that I need to do it on a regular basis!  I asked each of them to tell me what qualities s/he found most important in the agent used in a particular transaction, and which services offered were most appreciated.  And here are the results:

1.  Overwhelmingly, the number one factor that made agents great was communication.  Clients were happiest when agents kept in touch regularly, yet this simple fact was not taken for granted, as many agents don't do that.  People I contacted told me over and over again that it was really important to their selling or buying process that they be kept informed, and that their agents were excellent at living up to this need.  It was mentioned so often that it should be the first thing buyers and sellers ask about in an interview.  However, the fact that you ask about it and someone says that they will communicate often, does not guarantee that s/he will.  Tip for clients:  Make your expectations clear upfront.  Tip for agents:  Don't prejudge what a client will want to hear.  Tell him/her everything.

2.  The second point that arose again and again was that great agents control the process.  They serve as backups for clients, who may be buying or selling from far away, who may never have bought or sold a property before, and who almost always have a lot going in, in addition to the transaction in question.  Many people mentioned that their agents kept track of dates and deadlines, always reminding them not to drop the ball or let an important clause lapse.  Great agents anticipate the next need, and regularly remind clients to stay ahead of the curve.

3.  Great agents are knowledgeable about local customs.  They can explain mill rates and closing practices.  They can talk about differences from town to town.  They serve as sources for questions and research help.

4.  It was surprising how many people mentioned that their agents went above and beyond.  We don't always know that clients recognize what is part of the job, and what qualifies as doing "extra".  I heard of an agent getting the mail, checking the property often, taking care of repairs that needed to be done before the closing, and other tasks big and small.  It was gratifying to know that clients do appreciate that such service is more than the basic representation.

5.  Flexibility was a key trait mentioned.  Buying and selling are activities often done outside of the regular working day, and clients were impressed that agents rolled with the punches.  Also, great agents accepted that needs ebb and flow, and that sometimes searches would get back burnered, while at other times people were ready to move quickly.

What did they not tell me?  I was a little surprised that they didn't mention help with pricing or offers, or advice on choosing among properties.  That doesn't necessarily mean that clients don't look to agents for actual real estate advice, but it does seem to indicate that all the points above are what made the difference.  That suggests that there could be less emphasis on how long an agent has been in business, and more on service.  One seller used a questionnaire to choose an agent, and got pushback from those who didn't want to answer questions formally.  From everything I heard, great agents have no reason not to make promises upfront, because they really deliver down the line!  In fact, I should close by quoting one client:  "She really became a friend".  That's right, everybody.  While you are buying or selling, you may talk to your agent more than anyone else in your life, for that period of time.  Choose someone you like!