By Tom Branch, on January 21st, 2012 
Over the past couple of months we’ve seen lots of first-time homebuyers entering the market. They are enthusiastic, pre-approved, and ready to buy a home. The problem is a general lack of good homes under $150k.
Gina and I are currently working with four first-time home buyers looking in the Allen Texas area and we have only been able to find one of them a home. Don’t get us wrong, there are homes on the market in this price range, but the vast majority of them are foreclosures, short sales, or are in poor condition.
If you are a home buyer, you need to move quickly when you find a home to view. You simply cannot wait because the good homes are moving quickly. Homebuyers can click here to sign up for home alerts on The Branch Team website. This free service sends you an alert as new homes come on the market that meet your needs.
If you are considering selling your home this may be a great time to list it as homes that show well and are priced right are going quickly. Further, plenty of qualified buyers and low inventories present an opportunity to sell quickly. While prices are down in some areas, Collin County and DFW in general have weathered the storm well. Click here to read “Internet Marketing – The New Curb Appeal” and click here to read “Are You Show Ready?“
Please feel free to contact us at 214-705-2470 if you have questions or need help buying or selling a home.
Photo licensed from iStockPhoto
By Tom Branch, on January 21st, 2012 
The Internal Revenue Service has issued a 255-page guide in the Federal Register. The new rules, which went into effect on January 1, change the way investors can deduct repair and improvement expenses.
In the past, most investors took the one-time deduction of the repair or improvement expense during the tax year in which it was done. The new rules clarify what is a repair and what is an improvement.
An ordinary business repair of an asset is generally tax-deductible in the current tax year. An improvement is usually classified as a capital expenditure and gets depreciated over time.
Eric Lucas, a principal at KPMG LLP and a former Treasury Department tax counsel, said in an interview that this one of the more significant changes” from current accounting policy and could be troublesome for businesses that took “an aggressive view” in deducting repairs.
Investors should discuss these changes with their CPAs or Tax preparers now in order to make preparing their 2012 tax returns easier next year.
Photo Licensed from iStock Photo | Blog based upon a story published in Inman News
By Tom Branch, on January 20th, 2012 
I received an email from a past client today. He had received an email on the subject.
The email read, “Did you know that if you sell your house after 2012, you will pay a 3.8% sales tax on it?” The email goes on to blame the new Healthcare Law and all the damage it will do to the housing market.
Like many email hoaxes, it’s based on a partial truth. Within the new Healthcare Law there is a provision for a 3.8 percent capital gains tax on real estate sales. The reality is that this will not apply to many sellers. Currently the law allows an exception of up to $250k for single filers and $500k for a married couple filing jointly.
So while this will not apply to most sellers, I don’t think it’s a great idea. The main issue is that once they start the taxing it may be easier to move the bar down and tax more and more sales in order to generate revenue for the Federal government.
For the time being most sellers do not to be concerned about paying the 3.8 percent “Healthcare Tax” when they sell their homes. Sellers should always contact their CPA, tax preparer, or attorney if they have concerns or questions.
Base Photo licensed from iStockPhoto
By Tom Branch, on January 20th, 2012 
The U.S. Congress recently passed a two-month payroll tax cut extension. The $33 billion package is funded by a 10-year increase in the Guaranty Fees that Fannie Mae (Fannie) and Freddie Mac (Freddie) charge lenders to guarantee home loans.
This change is effective for all loans delivered to Fannie and Freddie at the beginning of the second quarter of 2012. For example, the cost of a $200,000 mortgage will go up about $11 per month. Over the life of the loan, these costs are anticipated to be about $4,000.
These changes will also increase the cost of FHA and VA loans. However, the government has not released information as to the timing of these changes.
All lenders — by law — will be adding this increase to their pricing.
Source: Prospect Mortgage
By Tom Branch, on January 19th, 2012 
I found this question in my site logs. Let’s clear up some terms.
Each state is responsible for licensing agents and brokers. Each has its own set of requirement and rules. For example, the Texas Real Estate Commission licenses and regulates salespersons (agents) and brokers within the State of Texas.
REALTORs® are members of the National Association of REALTORs® (NAR). NAR is a membership trade organization rather than a licensing agency.
A number of years ago NAR allowed Designated REALTORs® to establish Limited Function Referral Only (LFRO) Brokerages. LFROs have to be a separate business entity. NAR did not want brokers to commingle their “regular” agents with their LFRO agents. LFROs, like Referral Agents of Texas LLC, are established under NAR rules. Since it is also a licensed broker within the State of Texas, it can sponsor agents. Why is this important? Agents can only receive compensation through their sponsoring broker.
As far as the state is concerned LFRO agents are active agents sponsored by a Texas broker. What limits the agent’s activities is the Independent Contractor Agreement between the agent and the broker. This agreement specifically limits the agent’s actions to generating referrals.
A few states may have different “classes” of licenses with include referral-only agents. When in doubt check with your state regulatory agency for details.
Originally posted at http://www.referralagentsoftexas.com/2012/01/19/can-a-realtor-license-be-in-referral-only-status/
By Tom Branch, on January 19th, 2012 
As a property manager I often have this conversation with my investor clients. I understand trying to get the most possible cash flow out of a property but this has to be tempered by two issues–occupancy rate and quality of tenants.
You might ask, “How are they related?”
In part one, I’ll discuss occupancy rate.
Occupancy Rate is defined as the amount of time a property is rented over a period of time. If your rental is vacant for one month out of the year you have an occupancy rate of 91.6 percent. You arrive at the occupancy rate by taking the time the rental is occupied and dividing it by the total time available.
As an investor you should never plan on a 100 percent occupancy rate. We typically use 85 or 90 percent just to be conservative in our approach.
If your rental list price is set too high the property will sit vacant for a longer period of time. Let’s assume you have a rental unit that would quickly rent for $1500 but you list it at $1600. If it takes you an additional 30 days to find a tenant willing to pay $1600, you actually lost $400. What?
While the $1600 rent generates an additional $100 in monthly revenue, you lost $1500 for the month the property could have been rented at the lower price. So, over the course of a year you generated $1100 in additional revenue but lost $1500 due to the vacant month. This results in a loss of $400 during the year!
A higher rental price is usually only profitable if you can rent the property in a similar amount of time. Otherwise you typically wind up losing money.
In part two, I’ll discuss how rental price also impacts the quality of tenants.
Have questions or want to work with an experienced real estate team on purchasing or managing investment properties? Contact us at 214-227-6626.
Photo licensed from iStockPhoto
By Tom Branch, on January 16th, 2012 
“Are referral fees legal in Texas?” We seem to get this question all the time. There are two kinds of referrals. One comes from unlicensed people and the other from licensees.
Referrals From Unlicensed People
The Texas Administrative Code (TAC) 535.20 limits payment to non-licensed people to $50. Some people will try to skirt the law by purchasing gift cards or paying directly on behalf of the referral source. The rule clearly states, “the term valuable consideration includes but is not limited to money, gifts of merchandise having a retail value greater than $50, rent bonuses and discounts.”
Note that it’s not illegal for the consumer to accept the payment but the payment of consideration exceeding the amounts specified in 535.30 is grounds for a licensee to have their license suspended or revoked.
Referrals From Licensees
The Texas Occupations Code 1101.651 allows brokers to share fees and commissions with salespersons (agents) they sponsor and other brokers. TAC 535.131 clarifies this to include the sharing of fees and commissions with out of state and foreign brokers.
The bottom line is that referral fees paid to non-licensees cannot exceed $50 in cash, goods, services, rebates, etc. Referral fees paid to other brokers are acceptable and subject to the agreement between the brokers.
Photo licensed from iStockPhoto
Originally posted at http://www.referralagentsoftexas.com/2012/01/16/are-referral-fees-legal-in-texas/
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