Brent DeWitt

I am asked on a regular basis "What do I do now that I have my license?" I usually start droning on about databases or open houses and I get a similar response every time for the questioner, usually astute note taking and the focused attention on what I’m saying. This is a great question for my ego because everything I have to say is gold and I get a ton of attention.

Recently however, I have started telling people the truth about that particular question. I have realized that anybody that has ever even asked me that question is gone within 6-months or less. The part that really stings is that they never sold a thing and stole a ton of time from me in the process. "Why are they gone in 6-months?" "Because if you have to ask then your to stupid to be a Real Estate agent.

Isn't it obvious what you should do? It's like becoming a carpenter and asking "what now?", "go hammer a stinking nail into that piece of wood stupid." I mean really, if you have no clue what to do next then go get a real job where someone will tell you what to do next and quit wasting everybody's time.

I have found in answering this question no less than 100 times, that the more interested the person is in the answer, the quicker they will be gone. The people that don't care what's next and can care less about what my thoughts are about what they should do next, are the ones who succeed in this industry.

My dad once told me "Buyer's do what buyer's do and seller's do what seller's do." I would like to take that a step further and suggest that "Agents do what agents do." It means either start doing what an agent does or give up because your obviously to stupid to get it.

So the right question to ask when your new is "Can I sit a open house this weekend for you?" because that's what agents do!

Above are all the Sales, Pending and Active homes in Orange County as of 11-12-08.

*Backup is a form of pending that indicates that the owner will continue to market the property for sale and accept offers in the backup position until the home sales.

*Closed Sales are for the last 90-days in Orange County

*All propertys are not represented in this chart. Only homes that fall under Single Family Residences and Condo's are represented.

Thank you and hope you find the information useful,

BrentDeWitt.com

Here are the raw numbers for Orange County SFR's and Condo's taken directly from the SoCalMLS on 11-12-08.
*Closed sales are going back 90-days

Hope you find the info useful!

BrentDeWitt.com

Brent’s Resume and References

Stay away from them…..believe it or not I was very tempted to stop right here. I feel however that I owe my reader(s) a thorough explanation of my thought process, so let’s start at the beginning.

A long, long time ago when homeowner’s stopped paying their mortgage to the bank the bank simply took the home back and the deadbeat was out on the street. But, now there is a new game in town and it’s called stop making your payment, live in your house for another year for free, then at the last possible minute offer the bank a 50% less than what you owe them and walk away from your home with no financial obligations or penalties i.e. A Shortsale.

“WHAT……….no, this can’t be, that sounds crazy!”

Exactly, crazy….crazy if you go and look at these homes that are listed for sale. Crazy if you think the bank is really going to take less than 50% of what’s owed. And you have really lost it if you have a time frame for buying a home and you even mess around with these.

O.K., maybe you think I’m being to harsh on the whole shortsale thing. Well let me give you some “in the trenches facts”.

1. Per the MLS: 1 in 10 shortsales actually close escrow.
2. The average days on the market and escrow period for those closed are over 210 days.
3. Every offer I have submitted (20+) on a shortsale has been accepted by the owner and 3-4 months later the bank counter offer’s me 10-15% more and wants me to close in 3-weeks.
4. There is no real benefit to the owner to play ball. In fact the home owner gets to stay there longer if they just let it be foreclosed on by the bank.
5. Per Senior Management at IndyMac, Tim M: “There is no such thing as an Approved Shortsale.”

I could list another 10 reasons with no problem, but I won’t because I think you get the point. “So Brent, why are there so many shortsales out there then?”

“GREED”

Let me share with you who benefit’s from a shortsale:
1. The listing agent. (get’s a commission for selling the home)
2. The company’s that “negotiates” your shortsale for you. (get’s a percentage of the commission for scaring you into a shortsale)
3. The buyer less than 50% of the time. (sometime finds a diamond in the rough at a better than market price)

So if you have stopped making your house payment as a home owner my advice is to let your home go into foreclosure (I’m not qualified to give this advice and please don’t listen to me) because there is no real benefit to you to do a shortsale. The IRS law that was created to allow shortsales was put into effect when the banks had recourse on the amount that you shorted them; like filing a deficiency judgment to put a lien on you. Since there are new laws that stop the bank from coming after you for the shorted amount in most cases, you do not have to pay taxes the shorted amount; I ask you where is the benefit for the homeowner to shortsale?

Brent, doesn’t my credit get hurt more from a foreclosure than a shortsale?

“NO, call a educated loan broker if you don’t believe me.” Both foreclosure and shortsales wreck your credit and are looked at in the same light when you go to get a new home loan. By the way, you can get a FHA 3% down loan in 2-years after a S.S. or Foreclosure.

So if the rule is “don’t do shortsales,” then there must be an exception to prove this rule. And lucky for me there is….If you refinanced your home the bank CAN come after you for the deficiency between the amount you owe them and what they ended selling your home for through foreclosure. In this case I would do a shortsale because you will most likely have an opportunity to negotiate with your bank more favorable terms for payback than the default rate and terms that the State allows your bank after foreclosing. The technical terms are called a “purchase money loan” and a “cash-out refi” loan, look it up.

So my heart is beating fast now and I’m all amped up because the shortsales are causing way more damage than people realize. We have no idea what the true values of homes are because 40% of the inventory under $500,000 is Shorts, and only 1 in 10 get sold. In the mean time 9 out of 10 are undercutting each other to get the attention of the buyers which drives the perceived price of homes down and it all just a big giant mess.

The quickest way I can see to solve the housing crisis is to take all the shortsales off the market and just deal with the one we can actually sell today and work with decision makers not negotiators.

Brent
Professional Realtor and not a Ambulance Chaser

How do I figure out my real estate write-off?

Well this is not as complicated as it seems, let me first let me clarify this question. When people refer to a write-off we are talking about the portion of your payment that is interest. The IRS lets you "write-off" this amount from your gross income. The remainder of your gross income after the write-off is referred to as your net and that is what you actually pay state and federal taxes on.

So if I make $100,000 per year and pay 15% of that in taxes then I am paying $15,000 per year in taxes. Now if I have a $2,000 a month house payment then I have around a $1,900 a month write-off or $22,800 per year. You simply take your gross income ($100,000) and subtract your write-off ($22,800) which leaves you with your net or taxable income which is now $77,200. Since your tax rate (percentage you are taxed at) is 15% you end up paying $11,580 in taxes instead of $15,000. So by having a house payment you actually pay less in taxes than if you were a renter.

See, I told you it was easy..

There are some things I need to clarify before I set you loose on the world with this new found knowledge. Number 1, your tax rate may be higher or lower than 15%, it is based on how much you gross per year. The more you make the higher your rate and vice-versa. Number 2, a interest write-off generally only applies to a owner occupied home, not a rental. The last thing you should know is to always speak to your accountant before you buy a home, having your finances in order is very, very important today and you can probably afford more home than you think. Besides the tax codes change every year, so don't think because it was true last year that it will be true next year.

Here is an example of the write-off math for you visual people

Household gross income = $100,000
Interest write-off = $22,800
Net household income (taxable income) = $77,200
Tax base of 15% = $11,580 in taxes on your net

So to bottom line you if you can afford $2,000 per month in rent, then you can afford a $2,300 a month in a house payment because you pay about $300 per month more in taxes without a house write-off.

A last closing thought is that there are sooooo many good benefits to owning a home and a write-off is just one of many, many great benefits. I will make sure that I cover more of the good stuff in my future blogs.

As always, thanks for reading and blog you later,

Brent