Rodeo Realty

3.8% Sales Tax on Homes
There has been a rumor on the Internet that the health care reform bill includes a 3.8 percent transfer tax on real estate sales. It gives an example that a $500,000 home sale would generate a $15,400 tax bill.

Fortunately, this is not entirely true. It appears there will be a 3.8 percent tax on taxable net income from real estate sales.

The $250,000 for individuals and $500,000 for a married couple are intact for primary residences. The 3.8 percent will be computed on profits over that amount. So if a married couple has a $600,000 net profit from the sale, the tax would be $3,800 (3.8 percent of the $100,000 in profit over the exempt $500,000).

On investment property, this would be 3.8 percent of any net income (profit) upon sale, unless exchanged in a 1031 exchange. This is scheduled to take effect in 2013 and only applies to individuals with taxable incomes over $200,000 and married couples with taxable incomes over $250,000.

Bank Moratoriums
There has also been a lot of talk lately about the so called “robo-signers.” In a rush to process foreclosures as quickly as possible, some lenders hired people to sign-off on thousands of foreclosure affidavits per month.

By signing the affidavits, preparers attested to have personally reviewed each file. But given the rate these documents were being processed, many robo-signers admit they didn’t have time to properly review each case.

Backlash about the practice led some major mortgage servicers to temporarily halt foreclosures until internal investigations are completed.

Most of the robo-signing is related to judicial foreclosures. In California, foreclosures are non-judicial. California requires lenders to sign a document that certifies they made attempts to reach borrowers and offer different options to avoid foreclosure (e.g. loan modifications).

The bottom line is, on average, these borrowers are 18 months behind on payments. The robo-signer issue is a technicality that’s not likely to stop foreclosures altogether for most of these borrowers. It will probably just delay things for a few weeks.

Derrick Vallance knows the value of working floor time. That’s because a young woman recently walked into the Sherman Oaks office at about 6 p.m. and asked if she could speak with somebody about listing a home. Vallance took the meeting.

The woman, who works with an investment group, was blunt: She needed an agent who could get two houses on the market the next day, host open houses by the weekend, and somebody who was not going to make a bunch of empty promises. She said she had just fired an agent from another firm who lied about hosting open houses.

“If I weren’t at Rodeo and working late, this would have never happened,” said Vallance, adding he recently moved back to L.A. and has been working hard to re-establish his real estate businesss.

He took the listings. In two day’s time, and with the help of the Rodeo team, Vallance had ads running in the newspaper, professional quality signs in place, photos taken of the properties, color brochures, lock boxes, and flags and balloons for the open houses. The events were a success, he said.

The client came back the next week and asked him to list and host open houses for three additional homes. He accepted, though he plans to spread the open houses out to give his full attention to each one. If all goes well, the client plans on listing seven or eight more properties with Vallance.