Are you taking advantage right now of every tax break that is legally available to you? Probably not. The genius, Albert Einstein, is attributed to saying about taxes, “The hardest thing in the world to understand is income taxes.”
Are you trusting your tax advisor to provide you with all the tax saving benefits available to you? As experienced as many tax advisors are, most largely do a great job of recording the history that you give to them. It is far more uncommon to find an accountant that provides you with insight about tax breaks that you are not already taking.
Let’s explore some Tax Saving strategies and benefits – recommendations to put you in the driver’s seat and potentially put more money in your pocket, legally.
A real estate agent called complaining that he spoke with one of his buyers who wanted to see a property he found online. When the agent went to check the listing out, he was shocked. The commission stated was for $1.00. Being the professional that he was, he went to show the condo. He sent me a copy of the MLS sheet and lo and behold it was true. Then I contacted the listing agent thinking perhaps they were new and had made an error. Nope, she said, it was correct. The commission was one dollar.
Was this an isolated incident? No, the stories came pouring in from other agents. Another real estate agent showing buyers in a community where home prices start at $500,000 experienced something similar. The commission for the transaction broker was 3%. If you were a buyer’s agent, then the commission was only $1.
Now my curiosity was triggered to find out how many homes were for sale offering 1% or $1 commission. I searched multiple counties in one MLS in Florida, the results found 256 properties offering 1% commission with prices ranging from $25,000 to 12 million. Two were offering $1.
As more and more real estate agents build teams with agents that specialize in working with buyers, this concept can be hurtful. The 1% is often split multiple ways. The commission could be split with the head of the team along with the brokerage. That coupled with franchise fees, transaction fees, errors and omissions insurance along with business expenses could have your commission end up being less than 50% of the 1%. Then when you subtract taxes, the net income gets even lower. For many, this may not a profitable business model depending on the price of the home for sale. 1% of $50,000 is a lot different than 1% of 10M.
What Would You Do in This Situation?
We hear this over and over as professionals. The first offer is the best offer – especially when there are no other offers on the table. This viewpoint has withheld the test of time. What remains to be proven is whether this perception is the truth or a tale that we have all accepted as true.
Not Taking The First Offer Cost The Seller $10,000
Your listing becomes active in your market and a few days later, an offer is received. You, as the agent, are excited about presenting it to the seller after thoroughly reviewing it. “Wow, that was fast,” says the seller, “Why don’t we wait, since this came so quickly, and see if we get a higher offer from another buyer. Someone else will also want my home and be willing to pay more.” But does another offer come? Nope. When this property finally did sell, it was 3 months later. The offer was less, and the seller accepted it. She ended up netting $10,000 less than had she accepted the first offer. Ouch!
Sound familiar? Many sellers think that the Realtor just wants to sell the property fast and make their commission. But while that may be true of some, most Realtors have the sellers’ best interests at heart.
As online home buying and selling web tools advance, real estate agents have started fearing that clients will believe their commission isn’t justifiable with the services they provide. Creating value for clients by showing them how much easier the home buying and selling process is with a real estate agent is the best way to earn referrals and get past clients to want to do business with you again.
Here are a few of the most effective ways to create value for potential clients.
So you finally have your real estate license and you’re ready to kickstart your new career as a real estate agent. What do you do now?
While launching a career in real estate can be daunting, the following are a few ways to ensure you position yourself for long-term success in the industry.
One of the most discussed concerns agents have about across the industry is finding and converting leads. This makes the idea of actually firing a client once you have one seem completely inconsistent. But sometimes firing a client is not only the best option, it is absolutely necessary.
The following are 4 types of clients you need to cut ties with, and tips on how to break the partnership off in the most professional and graceful manner.