Keith and Kinsey's Real Estate Update

New Brokerage – Great Rock Realty
March 23, 2013, 6:09 pm
Filed under: Business, Real Estate | Tags: , , ,

Great Rock Logo TallWe’ve been slacking on blog posting lately. That is because we’ve been swamped! I think the last 6 weeks have been our busiest ever, and in addition to that we started our own real estate brokerage. I (Keith) made the transition to Great Rock Realty 5 or 6 weeks ago in to get things started. Kinsey just transferred her license over on Friday.

Great Rock Realty is now officially open and ready for business! In fact, we’ve already got two properties under contract as Great Rock Realty. Our website isn’t quite done yet, but it should be ready in a couple more weeks.

Our clients probably won’t notice much of a change with this move since we’ve always been fairly independent, even while working other brokers. Our goal with the new business is to provide the same great service, help more buyers and sellers, donate more money to charity, and eventually bring on other quality agents to do the same.

You will continue to see our personal branding as Keith and Kinsey Real Estate. This has become our recognizable personal brand. Great Rock Realty will just replace the roll that Keller Williams had played for us in the past. So, don’t be surprised to see both logos on signs around town.

We will continue our charity program with 10% of our commissions going to the charity of our clients choice. As we add agents and grow our new business, we will also donate 10% of Great Rock Realty profits to charity.

It’s been a lot of work to get things set up, and we are excited and looking forward to this new challenge and adventure. Thanks to all of our clients, family, and friends who have been very supportive in this move.

On a side note… 6 weeks until the baby is expected! 🙂 We’ve got lots to get done!


How Does A Buyers Agent Get Paid?
December 10, 2012, 2:27 pm
Filed under: Real Estate | Tags: , , , , , ,

Many first time home buyers stay away from buyer’s agents because they think it will cost them money. Well, the opposite is really true; a buyer’s agent will likely save you money. How, you ask? Well, most often the buyer doesn’t pay the agent, and the buyer gets the benefits of an agent’s knowledge, expertise, and negotiating skills. See our post about the benefits of a buyer’s agent for more info on how they can help.

So, how does the buyer’s agent get paid? With the typical sale, a seller pays an agent to list the property for sale. Within the listing contract this listing broker says they will offer a specified percentage of their commission to a buyer’s agent, if there is one. So, the seller is paying a commission to the listing broker, and the listing broker is paying a commission to the buyer’s agent. This is the way most deals work.

Where the buyer needs to be careful is with FSBO’s (For Sale by Owner) and lower commission MLS deals. It’s becoming more and more common that FSBO sellers are willing to pay a buyer’s agent, but it needs to be written into the purchase contract. Also, many buyer agencies contracts will say that the buyer’s agent gets paid a percentage of the purchase price or the MLS offer of compensation (what the listing agent is offering), “whichever is greater”. When you sign a buyer’s agency agreement, make your agent cross out the “whichever is greater” portion. If you sign an agreement to pay the greatest of 3% or the MLS offer of compensation and the listing agent is only offering 2.5%, you as a buyer could be on the hook for the extra 0.5%. These instances are rare, but you need to be aware of them. We’ve actually never had a buyer pay us any portion of our commission out of their pocket.

As a buyer, having an agent work for you through a transaction rather than for the seller, at no cost to you, is a no brainer.

The Fiscal Cliff – How Does It Affect Real Estate?
November 28, 2012, 6:43 pm
Filed under: Income Property, Money, Real Estate | Tags: , , , , ,

There’s been a lot of discussion in the news about the fiscal cliff lately. In case you aren’t already familiar, the fiscal cliff is a combination of several laws which would result in tax increases and spending cuts starting in 2013. So, how does any of this relate to real estate?

The Mortgage Debt Relief Act of 2007 is one of the tax breaks that is set to expire at the end of the year. Generally, if debt is forgiven or canceled, this can be considered income to the borrower because it’s money they borrowed that they no longer have to pay back. So the borrower could be taxed on the amount of debt they were forgiven. This act excludes forgiven debt related to foreclosure, short sale, or loan modification of a primary residence from being taxable.

Even though the NAR (National Association of Realtors) is fighting hard to extend this act, I’m kind of torn on my opinion. Part of me says, we absolutely need to prevent people who have lost their home from being kicked while they are down and taxed on their debt forgiveness. Although, the other part of me says without this act we would have fewer people strategically foreclosing (walking away for convenience or part of their financial plan), which I don’t agree with. Maybe this act could be revised to provide incentives for short sales instead of foreclosures? This may prevent some strategic defaults while still helping those that are really trying to work with the banks.

Capital Gains Taxes are also set to increase from 15 to 20% on January 1st. I’m somewhat indifferent on this topic too. As real estate investors, lower capital gains taxes are beneficial for my wife and I in the long run. Although, I also understand the need for the government collect more than they spend, and I don’t think this is such a terrible place to squeeze more money out of tax payers. This will however, raise expenses for investors who are helping to revitalizing distressed properties, which could have a negative impact on a recovering market. So, I’d prefer to delay the increase a year or two or slowly raise it back to 20% over a period of a couple years.

The Mortgage Interest Tax Deduction is also a discussion item. Currently mortgage interest is a tax deductible item. Although, law makers are threatening to trim deductions allowed related to mortgage interest. Again the NAR is fighting to keep this tax deduction around. I think we all realize that this tax deduction is an incentive for home ownership and taking it away could slow (if not severely damage) the recovery of real estate markets. Although, I don’t think it would have much market affect if they set a lower maximum allowable deduction or eliminated the deduction for second homes. I’m probably the only Realtor and real estate investor that you will ever hear say this…  but I wouldn’t mind if this tax deduction was reduced over time and eventually disappeared. Why? because I don’t think our government should dole out rewards for having debt. Debt and the willingness of the American people to overspend is what got us in this mess to begin with.

What are your thoughts on the fiscal cliff? Do you agree or disagree with my thoughts?


The Golden Rule – How Does It Relate In Business
November 15, 2012, 12:15 pm
Filed under: Business, Life, Real Estate | Tags: , , , ,

Most of you have heard of The Golden Rule; “do unto others as you would have them do unto you.” As far back as I can remember this rule has been engrained in my brain. I don’t know whether my parents taught it to me or if I learned it from a Sunday school teacher way back when, but it stems from Luke 6:31 and Mathew 7:12 of the Bible. Ironically our pastor spoke about this a couple weeks ago after I had written half this blog. In any case, I’ve discovered how useful the Golden Rule is in business, in life, and in relationships.

In real estate, and any business for that matter, challenges arise, and mistakes happen. Often when a complication arises in a business transaction somebody ends up getting pissed off, defensive, disrespectful, or blaming. I’ll admit I’ve been guilty myself a time or two. However, you’d be surprised at the number of times I’ve had another agent yell, cuss, or even hang up the phone on me (I can say I’ve never done that). That kind of reaction never solves anything.

I always try to put myself in the shoes of the person on the other side of the deal. I ask myself if I were them, what would I do? …and If I were them, what would I want me to do? After all, a transaction must work for the people on both sides, or you’re not going to reach a deal.

This thought process not only helps a lot with the respect factor, it can also help with negotiations. You can negotiate hard while still being respectful, and treating others how you expect to be treated. In fact, if you can be friendly, helpful, and find out what the other party really needs it will almost always result in a better deal.

In other respects treat your clients how you would want to be treated as a client too. The reason most businesses fail is because they don’t meet the needs of the customer. A business is profitable when their product or service is valuable to the consumer. Provide your clients with the service or product you would expect and your business will be perceived as valuable.

This golden rule works well for our real estate sales business, our rental business, our marriage, and life in general. It’s Gods rule and words to live by. It’s not about you, it’s about others. The rule of business is the same as life and the path to success requires you treat others the way you wish to be treated. Doing the right thing is the key to integrity.

Be The Best In Your Business
October 8, 2012, 12:58 pm
Filed under: Business, Real Estate | Tags: , ,

I have had quite a few people ask how we managed to begin our career as real estate agents in the worst possible market and grow to be successful in just a few short years. I tell them, it’s quite simple… We provide great service.

I’m sure there are lots of other factors too. Our backgrounds in Architectural technology, income property, and marketing definitely help. Also, the fact that the bad market weeded out a lot of unsuccessful agents helped too. Now, we’ve been able to ride the market up with the recent flurry of activity.

Customer service is really key. It never ceases to amaze me the number of people in business that just aren’t very good with service and follow thru. I’ve had many agents, project managers, lenders, and contractors fail to respond when inquiring for more information. Lots of professionals work for their own best interest rather than their clients.  Some, are even rude and unprofessional to other in their business and prospective clients.

The bottom line with any business is to be the best you can possibly be and provide the best service you can possibly provide. It’s not a difficult concept, but it seems to be so rare. If you have a product or service people need, and you provide good customer service, you will be successful. Here’s what we strive to do that could potentially help your business :

  • Respond to emails, voicemails, and online inquiries in a timely manner.
  • Be respectful to everyone you talk to.
  • Follow thru. If you tell someone you’ll do something, do it.
  • Operate with honesty and integrity.
  • Remember service to your colleagues in the trade is just as important as client service.
  • Meet your deadlines and timeline.
  • Plan ahead and don’t wait until the last minute.
  • Follow the Golden Rule – “Do unto others as you would have them do to you.”

If you follow these few simple rules, you’ll undoubtedly outperform 80% of your colleagues.  Like I said, it’s simple, and very much common sense. Although, common sense doesn’t seem so common these days.

Should I Refinance My Mortgage?
August 16, 2012, 10:29 pm
Filed under: Real Estate | Tags: , , , , , , , , ,

With unbelievably low interest rates lots of people are considering refinancing. Refinancing is a great way to reduce your monthly expenses and minimize the amount of interest you pay over the long term. So, how do you determine refinancing makes sense for you?

First, figure out what the interest rate is on your current mortgage, and check to see what rate you could refinance to. If your current rate is 5% and today’s going rate is 3.55% there’s a good chance it would be worth refinancing. Check on online mortgage calculator to see what your new payment would be if you did refinance. Don’t forget to factor in taxes and PMI if those are part of your current monthly mortgage payment.

Once you know your new payment vs your current payment you’ll know how much you would be saving per month. Now factor in closing costs. The best way to do this is to call a couple lenders and ask what you should expect for closing costs if you refinance through them. Then you can divide the closing cost by your monthly savings amount and this will give you the number of months it will take you to break even.

For example:

Monthly savings = $142

Closing costs = $1900

Break-even point = $1900/$142 = 13.4 months

In this example, if you planned to keep your property for more than 13.4 months it may make sense to refinance. Although, one other factor you should consider is the length of time you have been paying on the property. If you are already 10 years into a 30 year mortgage, the monthly savings likely aren’t worth the extended term. In this case, you should give a shorter mortgage term serious consideration. If you can cut your remaining 20 years down to 15 years for the same monthly payment, it would be well worth it.

Yet another factor in refinancing is adjustable rate mortgages. In my opinion, there’s a good chance rates will be a good bit higher 5 years from now. So, if you are currently in an adjustable rate mortgage, consider taking the security of a fixed rate while rates are low.

Keep in mind, there are lots of requirements in order to get a loan. Many lenders require 10% equity, great credit, and good job history. For those that don’t meet these requirements, or are underwater, there may be still be some options. Check into the HARP program or if you have an FHA loan, the FHA streamline refinance would be a great option.

The bottom line is, if you haven’t looked into refinancing in the last few years, do some research and call a lender to see what your options are.

What is the difference between appraised value, assessed value, and market value?

This was the question in our Ask A Pro segment of the Verona Press this week, but I thought I would expand on our response.

The Appraised Value of a property is a valuation conducted by a certified independent professional who visits a property and compares it to similar recently sold houses in the area. The appraiser will make adjustments to the value based on pros and cons of the subject property in comparison to the recently sold properties. This value is primarily used by lenders for financing purposes to make sure that the property is worth the amount they are basing the loan on.
The Assessed Value is a value determined by the local government and is used to establish property tax payments. Though market data is used during this process, the assessed value is generally less accurate because it is an annual snapshot without a property visit. Keep in mind, assessors are tasked with the job of valuing tens of thousands of properties. I always tell buyers and sellers to ignore the assessment when trying to figure out the value of a property.

Ultimately, the Market Value is determined by what a buyer is willing to pay for a particular property on a particular day. Keep in mind, property values vary with time and market conditions. What somebody is willing to pay today, and what somebody is willing to pay two months from now could be different values.

There is one last form of valuation, called a Comparative Market Analysis. This is an analysis done by a real estate agent, usually for purposes of determining a list price or a purchase price for a seller or buyer. Agents generally look at recently sold comparable homes, like an appraiser does to determine an estimated market value. If you have property in south central Wisconsin, feel free to contact us for a free market analysis to determine what your home may be worth.