The idea of Bulldozing houses is nothing new.  Although the banks are not blowing up homes for alturistic reasons…I think we can all agree that removing home inventory is good for all of us.  In 2010, Warren Buffet advised that ”blow up a lot of houses” was a viable option and similar to ‘cash for clunkers’ auto program.  I always thought bulldozing abandoned homes and returning the land to a raw state was a smarter solution than handing out money in the form of a homebuyer tax credit.   The tax credit cost billions of dollars, put money into the hands of a few people blessed with good timing and did little to reduce inventory.  

Bankers, why not take the “TNT” strategy one step further.   Donate unwanted houses to local non-profits vs blowing them up?  Make a call to Habitat for Humanity, for example?   I can’t understand why Habitat is still building new homes, when we can’t get rid of the ones that are causing problems in our neighborhoods.   Habitat needs to change their business model with the times and so do our lenders.  Families, who are in dire need now, wait up to 6+ months for a new home to be built and the cost of building from scratch far exceeds the costs of rehabbing properties, in most cases.    

Just my two cents….

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Olmsted discovered this himself when he tracked the value of land around Central Park and found that the city’s $13 million investment had led to an astounding $209 million increase in just 17 years. The architect recognized what many planners still fail to grasp: Parks and managed green space are vital pieces of urban infrastructure that not only improve the quality of life for millions of people but also drive economic growth. 

Today we must act again to transform our cities. The commercial real estate binge of the past decade and the growth of online shopping as an alternative to brick-and-mortar stores have left more than 200,000 acres of vacant retail, office and industrial space. Residential real estate is a massive problem as well.  Distressed properties are a drag on our communities and the economy, and threaten to topple even more banks that hold mortgages on these “toxic assets.”   We need to move these toxic assets off the banks’ books, reduce the surplus of commercial space and create jobs, all while revitalizing our cities. This brings us back to Olmsted.  

Olmsted designed transformative parks, campuses and greenways; his firm completed an amazing 6,000 commissions and launched a green wave across 19th-century America. The same kind of wave could help resolve the 21st-century real estate mess.  We don’t have the luxury of vacant land that Olmsted often started with, so we must bulldoze underperforming and underused property, put people to work creating parks on some of the land and “bank” the rest until the economy recovers. 

Beginning with Atlanta, Georgia Tech is researching what is needed to accomplish this in 12 major cities. The project is known as Red Fields to Green Fields. Under this plan, some of the abandoned or underutilized property would be acquired by a parks agency or by public-private partnerships, which would then begin demolition, park design and construction, putting people to work immediately. More jobs would come as the improved areas attracted development.

 This would not be the first time that property has been bulldozed for economic gain. The railroads, which had many miles of underused track to maintain, pulled up 55 percent of their tracks in the past 60 years to increase profitability, enabling the creation of 19,000 linear miles of “rails-to-trails” parks. 

Pittsburgh, realizing that the steel industry was never coming back, tore down riverfront steel mills and replaced them with an attractive mix of parks and office space. In Michigan, Flint and Detroit are finding ways to “bank” land as open space.   The banking system and the federal government could play an important role in this effort. Rather than backstop bad real estate paper, the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC) and the Treasury Department could help finance the acquisition of excess commercial real estate through a land bank fund. 

Instead of buying mortgage-backed securities, why couldn’t the Fed buy excess developed real estate to be held as green space through “land-backed securities”? Why couldn’t the FDIC give some of the useless properties it obtains through bank closures to land banks or nonprofit organizations?   With the right financing structure, philanthropic entrepreneurs could use leverage to remake America just as some of our bad developers used easy bank financing to help create the excesses.   

Acquisition money could also come from expanding tax incentives that encourage banks and landlords to donate land and encourage wealthy individuals and corporations to buy conservation tax credits. Georgia Tech’s analysis has also shown that the money needed for a nationwide program would be a tiny fraction of current real estate support programs, such as the Fed’s “quantitative easing” or its recent purchase of $1.5 trillion in mortgages. 

The 2009 stimulus package did much to protect jobs but little to stimulate the economy with transformational investments.  Converting underused commercial real estate to green space and “banked” land would be transformational. It would create jobs, strengthen the banking system to encourage lending and stabilize property values so that real estate owners would be ready to spend again. Most important, lush new parks would enhance neighborhoods across the country. 

Michael G. Messner is a Wall Street investment fund manager. He and his wife, Jenny, funded the documentary “The Olmsted Legacy,” which is airing on PBS, and are funding the Red Fields to Green Fields research at Georgia Tech.

Why6Percent.com thinks that Mr Olmstead and Mr. Messner may be on to something here.   We will follow this topic and update you with further developments.

Leasing out your home can be a great experience.   A good tenant will care for your property, while paying your mortgage.   Owning investment property also has tax benefits, and while the home selling market maybe soft…the present rental market is stronger than ever.

CLICK HERE TO REVIEW OUR 8 TIPS FOR NEW LANDLORDS!!!

Thank you for visiting Why6Percent.com.  We have helped countless homeowner’s sell their homes without paying expensive commissions and fee’s.  We can help you, too.  Click the link above to learn about our  Flat Fee MLS program or our fantastic Good Until Sold offering on Realtor.com

PS.  Check our blog tomorrow when we share the secrets of good property managers

Please note that some of the figures used in our examples will vary depending on the state or county a house is sold in, as well as the settlement company used and any other unique provisions that may be contained in a contract of sale. Additionally, the real estate broker commission is typically 6 percent of the sales price, but it is not a set amount.  It is a sales expense negotiated between individual sellers and brokers.   For the purposes of our example, a $250,000 sales price was used.

 Transfer taxes

As you might expect, most state and local governments make sure they profit when someone sells a house.  In most states, one-time transfer taxes will be due when a sale takes place.  It is customary for transfer taxes to be split 50/50 between the buyer and the seller, but there is no set requirement that they be divided in that manner.

Some states, like Alaska, Idaho, Indiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah and Wyoming, have no transfer taxes at all. In other states, Colorado for instance, the transfer tax is nominal – the state charges only one tenth of 1 percent ($40 on a $400,000 house) in transfer taxes. The so called “Free State” of Maryland falls on the other end of the spectrum with some of the highest transfer taxes in the nation.

Commissions

As we stated earlier, real estate commissions are not a set amount. They are a point of negotiation between the seller and the broker. For illustration purposes here, we are using 6 percent, or $15,000 on a $250,000 sale.

Another seller expense you may run across in some area’s is a listing broker administrative brokerage commission.  It’s usually adds another $250-$500 expense on top of the 6 percent commission fee.  The seller will see it as a separate expense on their closing statement.  So, what is this fee for? By law, brokers must keep records of all their real estate transactions for a period of years. And they must produce those records if asked for them.  Although it’s a ridiculous added on fee, the listing broker administrative brokerage commission is an expense passed along by some brokers to help defray the cost of this requirement.

Settlement fees

The buyer is responsible for hiring the settlement or title company to perform closing, so the buyer will usually pay most of the fees associated with settlement. But, the seller does have some settlement expense.  If the seller has an outstanding loan on the property, the settlement company will take care of paying that loan off out of the sales proceeds. They’ll charge something for the service, plus the cost of overnight fees to quickly get the loan payoff to the mortgage holder. In our example here, we’ll use $250.   And, since interest in collected in arrears, the seller will be responsible for any interest charges that accrue after the last payment thru the day of closing.

The Bottom Line

If you sell your house for $250,000, you can probably expect to walk away with around $230,000 after taxes, commissions and fees.  If no real estate commissions need to be paid out, the seller could expect to walk away with approximately $245,000.  The real number will depend on exactly what it says in the sales contract and where the property is located.

Thank you for visiting Why6Percent.com.   We help do-it-yourself home sellers market their home to millions of home shoppers every day.  We can help you get the word out about your home, too!!

Why Replacing Your Windows Pays Off…

1. New windows improve the curb appeal and increase the value of any home.  
2. Buyers pay up for new windows.  Numerous studies show that home sellers recoop 90+ percent of the costs for window replacement at the time of sale.
3. Homeowners realize the energy savings immediately, while increasing comfort.
4. Energy efficient windows are a Green home selling feature. 
5. New models of windows are easy to clean and maintain. 
6. Improve your view.  New glass is so clear it’s just like looking through… nothing at all. 
7. Maybe Best of All…Uncle Sam Pays for It.   The government will pay 30 percent of the cost (up to $1500) to replace the windows in your home through December 31, 2010.  And, don’t forget to check out the additional rebates and savings on windows that are being offered in most states, cities and townships.

Tip for a Tight Budget

1. Just replace some of the windows.  Choose the ones on the front of the home, because they improve the curb appeal.  Or, replace the windows that get hammered by the most weather, be it sun, rain, snow or wind. 
2. Or, Roll the Dice…and, maximize the tax credit by replacing half of the windows in 2010.  Then, gamble on an extension of the credit into 2011 and replace the other half.
3. Uncle Sam picks up a Third of your bill and smile (:

Practical Advice About Window Replacement

1. Use a company that carries a wide range of window brands.  Make sure they use their own employee’s (not subcontractors) to do the installation.
2. Profit from the Housing Crash.  Be a hard negotiator and get at least 3 quotes.  You can save Big on labor and materials because the housing market is slow.
3. Replacing windows is a big, messy job.  Cover up anything important such as electronics and furniture.  Sawing and Ripping out windows is dirty business, no matter how good the installer.

Thank you for visiting Why6Percent.com.   We have a program for home sellers that offers the MLS, Realtor.com and advertisement on dozens of real estate listing posts for one cheap price…and the seller keeps the commission.  Call 1-800-381-9496 or visit http://www.why6percent.com today for the details.  You will be happy that you did!!!

Why?  Interest rates are rising.  Job losses have slowed to a trickle.  Factory and Industrial output is up for the first time in years.   And, we feel that the Fed is holding back information, for now, on the job creation that is happening as we speak.

So, where are the best real estate deals in the country??  We have identified 10 cities that are offering up Trump-type deals of a lifetime.   CLICK HERE to see where the action will start first.

If you haven’t placed your property listing on the MLS, Realtor.com, Zillow, Google, MSN, Military.com and all the other major real estate websites…you are missing buyers.  Go to the Why6Percent.com website and sign up NOW!!Don’t wait a minute longer.  Tax Credits, Rising Rates and Gutted Home Prices are creating a stir among buyers early this spring.  You snooze…you lose…  And, we certainly don’t want that.

Depending on where you live, you may have never experienced a winter like this one.  I know I haven’t.  Week after week, snow, rain, mudslides and/or freezing temperatures have pounded the country.  With only 1 state out of 50 snowless, it’s easy to see why no one is attending Open Houses… Fortunately,  with February nearly over,  the crocus will soon appear and we predict that homebuyers will hit the streets enmass.  

Home Sellers Get Ready.  The nasty, record setting winter certainly put a halt to home sales, but the upside is the pent up demand it created.  People who expected some typical, nice days to tour homes after the holidays, have  found themselves stuck inside with nothing to do but watch HGTV and dream about buying a home.  We predict these stir crazy buyers will hit the streets at the first opportunity. 

$8000 Reasons to Motivate this Spring.   The $8000 tax credit for homebuyers expires in 43 Days.   To cash in on the lucrative tax credit, buyers must be under contract for a home before April 1st or they forfeit $8000 grand!!  That’s a lot of motivation to get serious in a hurry.

Cheap Money.   The Fed and Mortgage Bankers all acknowledge that interest rates will increase this spring and continue moving upward through 2010.   Buyers know that if they snooze they lose the chance to lock in a cheap, fixed rate loan and risk pricing themselves out of their dream home, entirely.

Get Ready. Get Set.  Sell.  Home sellers should prepare for a surge in buying activity this spring that has not been seen in several years.   Make every second count now by deciding on your selling strategy.  Agent? FSBO? FSBO, combined with the power of the MLS?  Whichever you chose or want to pay for,  make sure you use the internet for all it’s worth.  And, get to  know your local home market like the back of your hand.   

Why6Percent.com will make sure you are ready when the buyers show up.   Place your property on InfoTube.net for FREE exposure to thousands of buyers each week.  Advertise your home listing to every buyers agent and on every real estate website with our cheap, flat fee MLS listing, and keep the commission.  Either way you chose, act now.  You can’t afford to wait until the buyers are looking.   This is what you’ve been waiting for.

Cut foreclosures by slicing real estate fees

Al Lewis

Tuesday, February 2, 2010

President Obama has often said that it would be a shame to waste this economic crisis. Nowhere is that more true than in residential real estate. Federal home-buyer tax credits up to $8,000 designed to increase home sales and reduce foreclosures are having little impact.  Sales of existing homes fell a record 17 percent in December, while foreclosure petitions are rising. Instead, let’s use this crisis to try a new approach: permanently slashing the 6 percent real estate brokerage commissions prevalent in most markets.

Unlike commissions paid for buying cars, stocks or insurance, these hidden commissions include two payouts – about 3 percent each to the seller’s broker and the buyer’s broker.  But there’s no need for two brokers in real estate transactions.  These hidden fees survive only because real estate brokerage is a cartel.  Forty years ago, you needed one broker to buy a house – today you need two.  In law and medicine, fee splitting is illegal. In real estate, it is required.

Most people would not hire commissioned brokers if they had to pay for them directly – that’s why the brokerage industry wants them hidden.  So let’s eliminate hidden fees for the buyer’s broker.   We could then drop the homeowner tax credit, since the buyer is saving three grand, and replace it with a $1,000 incentive credit.  This cash bonus would go only to home buyers whose purchase prices include a total commission of 3 percent or less (or none at all).

The selling brokers will naturally complain: “We can’t afford to split a 3 percent commission with the buyer’s broker.  That’s how much we need to make ourselves.  So buyers will have to make their own arrangements if they want assistance.”

And that is exactly the point:  Instead of allowing the 3 percent commission to be hidden in the sales price, this tax incentive would encourage home buyers to pay openly for whatever level of assistance they want, if any. Given those other options and the chance to collect $1,000, few buyers would opt to pay a 3 percent out-of-pocket commission – about $15,000 on a median-priced Bay Area home.  Faced with the prospect of paying that bill explicitly, most Internet-savvy buyers would probably opt for personal advice just a few times during the home-buying process, and pay by the hour or by the showing.

Even with only $1,000 of tax credit, these buyers will be better off financially than first-time buyers who collect a hefty home buyer credit, but who still pay hidden commissions.  And taxpayers are better off, too.  Any buyer could still opt to pay the traditional commission at closing – but would have to forgo the incentive credit.

This temporary incentive credit could permanently alter the structure of real estate brokerage, because there would be no going back once the credit expires.  As happened when stock commissions were allowed to decline, much lower transaction costs would create more transactions and hence more liquidity.  Liquid markets will allow people to sell houses more easily before they go “underwater,” thus reducing foreclosures.

Of course the real estate brokerage industry, which has strongly endorsed home buyer tax credits, will oppose this incentive credit. Fortunately, an equally powerful coalition of builders, bankers, mortgage brokers and consumer advocates will be lined up supporting it.

Much lower transaction costs would not just reduce foreclosures by facilitating transactions, but would also increase people’s net equity in their existing homes.  Homeowners would be better off and, at least in real estate, this economic crisis would not be wasted.

Al Lewis is author of “OOBonomics: 12 ‘Outside Of the box’ Ideas to Improve the Economy.”

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/02/ED4C1BP3O5.DTL

This article appeared on page A – 10 of the San Francisco Chronicle

Thank you for visiting Why6Percent.com.  Our network brokers list property on the MLS and real estate websites for only $399…Why Pay 6 Percent????

Through 2010, homeowners who install energy efficient windows, insulation, roofs, doors or heating and air systems can apply for a 30 percent (up to $1500) tax credit for each product they purchase. 

Even better….homeowners can receive a 30 percent tax credit through 2016 (with no spending limits) when they purchase green, energy saving products such as solar systems, geothermal heating pumps, small wind systems, residential fuel cells or micro turbines.  For complete details, visit the Energy Stars Federal Tax Credits for Energy Efficiency website.

Thank you for visiting Why6Percent.com.   Advertise your home on the MLS, Realtor.com, Google, MSN, Zillow and most major search engines for real estate for 6 months for only $399.  Why Pay 6 Percent??????

What can you Learn from Foresight vs Hindsight this Year?

1. To make the most money in 2010…Get your house clean, cleaned out, staged and priced to sell NOW.
2. Do not wait until Spring is here to put your home on the market.  Do it NOW!
3. 90 percent of all home buyers shop on the internet, not newspapers, local or otherwise.  If you aren’t marketing your property on all major websites for real estate, buyers will not find your home.  There are simply too many homes for sale and buyer’s will not any waste time ferretting out information or for obscurely advertised property.
4. Use photographs and video’s to show and sell your home.   Add in video or snapshots of the neighborhood, nearby shopping, parks or attractions.   Pictures, and especially video, create interest and a glimpse of lifestyle that buyers crave.
5. Sell it yourself, but enlist the help of buyers agents.  Buyer’s agents use the MLS to find property for their clients.  Advertise on the MLS and offer up some commission to them, if they bring you their buyers!  Bonus: If you list your home on the MLS, it will immediately stop all annoying listing calls, too.

Why 6 Percent is in the business of helping sellers market their homes on every major real estate website, search engine and the MLS with one click of your mouse.  Visit our website or phone 1-800-381-9496 for details.  We can put your property in front of millions of home buyers within 24 hours.  Don’t delay.  Act Today!!