Tree Growth Tax–April 1 Deadline!

 Posted by Walter at 4:21 pm
Jan 242012
 

Reprinted with permission from WoodsWiseWire, an occasional electronic newsletter provided by the Maine Forest Service, on topics of general interest to woodland owners, foresters, loggers, and others interested in Maine’s forests. For more information on MFS programs, services, and publications, call the Maine Forest Service at 207-287-2791, or 1-800-367-0223, or send an email to forestinfo@maine.gov  Visit our website at www.maineforestservice.gov.

Tree Growth – also known as the Maine Tree Growth Tax Program – is Maine’s current use tax program for productive forestland. The program is administered in organized municipalities by town assessors and in the unorganized territories by Maine Revenue Service’s Property Tax Division. “Current use” means that enrolled land is valued according to its ability to grow trees for commercial use, rather than according to its fair market value. This often results in a significantly reduced property tax bill for enrolled landowners.

Tree Growth can be a beneficial program for landowners who manage their land sustainably for commercial forest products. In exchange for generally lower property valuations, landowners commit to following a written Forest Management Plan prepared by a Maine licensed forester. A licensed forester must also certify that landowners are following their plan.

Landowners are required to submit a signed Tree Growth Application and a supporting map to the assessing agent. The details of the forest management plan belong to the landowner and are not public information, although the Assessor may request a copy of the plan and hold it for a reasonable period of time for review.

The Maine Forest Service (MFS) provides assistance and education about the Tree Growth Tax Program, and forest management and planning in general, but does  NOT administer the Tree Growth Tax program.

Landowners should be aware of some very important requirements:

1) Land enrolled in Tree Growth must be recertified every ten years. Written management plans must be updated at least once in a ten year period. Could this be your year to update your plan and recertify?

2) In addition, when Tree Growth land is purchased, inherited, or otherwise acquired, new landowners must re-enroll within one year of the date of transfer. New landowners may not harvest timber until they have had a new forest management plan prepared or adopted a previous but still valid plan, and re-enrolled. Have you acquired or inherited forest land recently? 

Why is this important?

Because Tree Growth forest land that no longer complies with the program – including failure to recertify or to re-enroll on time– must be withdrawn from the program, with potentially significant monetary penalties to the landowner. Withdrawal can occur even if you were not the owner at the time the land was first enrolled, because Tree Growth status “runs with the land” – the parcel remains enrolled, even if it changes hands. Continue reading »

 Buying Real Estate, Land, Land, Selling Real Estate  No Responses »

A Strange Irony…

 Posted by Walter at 7:56 am
Jan 182012
 

In what has to be a strange irony…

Internet users will find a number of sites not available today as site owner join in a protest of pending legislation that creates broad censorship of the Internet in the United States-a country that claims to be a world leader in human rights and individual freedom. On those sites, you will get some form of a protest message instead of the usual content. On other sites, there maybe a protest “ribbon” or banner… My “Brain Leaks and Musings” site is blacked out.

The reason this one isn’t… is sorta ironic. When I went looking for the code I needed (today is the day) the sites where I would normally access the information are blacked out!

I suppose it sounds a bit strange to apologize for my site being available, but I can still participate by encouraging you to visit: http://sopastrike.com/strike. Another page that’s working is: http://act.fightforthefuture.org/page/s/sopa-strike-modal. The blackout is only for one day, but the protest will continue until January 24th. Get informed; contact your senator or representative. This bill actually has serious support in congress and it could cost you your Facebook and many other sites.

 

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The short road from “no thanks,” to “leave me alone!”

 Posted by Walter at 8:08 am
Jan 172012
 
“Leave me alone!”

Nearly every day I have to delete emails or “zip flyers” from other  agents who feel compelled to “market” their listings to me. In some cases these flyers come as huge files that take forever to download… in other cases they represent properties outside the area I tend to work in. Some clearly violate real estate/fair housing rules and a majority violate the “CanSpam” act.

I used to respond directly to the sender with suggestions and observations, but I found the odds were about equal. Half would thank me; the other half would basically tell me to “mind my own business” because they are busy doing their fiduciary duty to their client.

Since I’m pretty obsessive about fiduciary duty (there are actually seven listed in Maine Real Estate Law) I decided to do a little more research on the outside chance I was missing an opportunity to serve my clients. On occasion, I’ll ask my real estate students about “marketing” and what they think it means — especially in terms of fiduciary duty to the clients they represent. Many take the position that “all exposure is good.” I challenge that thinking with this suggestion: “Then I hope you are taping your business card to the wall of every public restroom you use.” How’s that for a technique that is low cost with lots of exposure!? (Pun intended.)

Maybe it’s because I’m an instructor that I tend to wonder what we are teaching our clients with some of the stuff we do and don’t do. I also tend to wonder how much our clients know and don’t know. I do know that when there’s an online real estate discussion, it is clear many do not know basic real estate law and practice. Heck, I see it in my own practice.

Now admittedly, a seller is unlikely to get into legal trouble if the agent representing them violates one of those laws previously mentioned. But a seller does need to monitor their agent’s performance to be sure their “marketing” program is efficient, professional, and not so intrusive that people are responding “leave me alone.”

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Keep Going!

 Posted by Walter at 8:01 am
Jan 072012
 

I recently announced that I was not making any new year’s resolutions, but I was adopting a slogan: Keep Going! After a week or so of operating with that simple slogan I’m convinced I made the right choice.

The beginning of a new year is always a good time to reassess and it’s no great surprise that the calls and emails currently reflect that. People do seem to be considering what they want to accomplish this year: buying a home, selling property, taking a course. It’s all good stuff, but the problem with resolutions is also the problem with goals. Enthusiasm can fade quickly–especially when external factors (like the market and the economy) seem to be constantly working against us.

That’s when we have to “Keep Going.”

All of those decisions (goals and resolutions) have an obvious financial aspect. One of the things that still amazes and distresses me a bit is the amount of “financial illiteracy” I encounter with students and real estate clients. However, I can’t be too critical of it–because I’ve found myself feeling pretty ignorant when I talk with my financial advisor. Things have gotten pretty complicated in the financial arena. Consider, for example, how many different program choices a buyer has when it comes to mortgaging. I’m convinced that one thing keeping prospective first time home buyers from acting is they just don’t want to deal with the complexity.

Conversely, I’ve worked with clients so determined to achieve their dream they didn’t want to deal with reality. “The bank won’t give me a mortgage I can’t afford; that’s what got them in trouble.” At the other end of the spectrum, this is easy–all that matters is what I want. Part of my job is to make sure buyers understand that the price of the house and the mortgage payment are only one small part of the cost of home ownership.

Those who might be feeling a bit overwhelmed by all this financial “stuff” will find it easy to “keep going” but may not be thinking about where they are going to end up. (I’m reminded of the wisdom “If you find yourself in a hole, the first thing to do is stop digging.”)

One of the new courses I’m developing for this spring is “Cash as a Crop.” It’s part of a You Can Series we’re developing as a collaboration between the Piscataquis Valley Adult  Education Cooperative and Piscataquis County UMaine Extension. There are a number of courses geared to giving people information and skills emphasizing what you can do–some are very basic, but all are about facilitating a sense of independence and control. (That, by the way, is one of the driving motivations for owning your own home!)

In that spirit, let me share with you several resources for getting your financial affairs in order. Here’s a great site with some very practical financial advice… http://www.thesimpledollar.com/. I liked his explanation of mortgage rates a lot… and found his advice to someone who is considering walking way from their mortgage interesting, because ethical considerations aside, there are some serious financial aspects that most people don’t consider.

Another resource is http://www.totalcandor.com. Frankly, it’s a bit self-promoting, but with some justification. I met Michael Rubin at a financial literacy conference and found his approach refreshing because it’s down to earth and he’s got a great sense of humor. You might check out his blog and consider his book “Beyond Paycheck To Paycheck.” It’s a good read.

I don’t think it’s too late to make a resolution, set a goal, or adopt a slogan. Given the financially troubled times we are living in can be discouraging, but let’s keep going!

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Merry Christmas!

 Posted by Walter at 7:06 am
Dec 222011
 

Greetings of the Season!

While it has become traditional, it is not habitual! The holidays are a great time to say “thank you” and to recap the past year.

About this time last year I announced that I was “moving to Mallett” and I’m pleased to say that decision has proven even wiser and better than I thought. The move has allowed me to focus my brokerage business and become more localized while working with some great folks. I certainly do not miss the commutes to Newport!

This no doubt contributed to the fact that I’m having a fairly busy year in spite of the market situation. But I still believe that my fundamental focus drives my success. Diagnosing problems and understanding clients’ needs has always been important; given the increasing complexity surrounding the buying and selling of real estate, now it is vital. More than ever you need a partner who knows how to learn and who knows how to teach.

And speaking of teaching, I am now teaching at least six real estate pre-licensing courses every year. Those of you who know me well know that teaching is my first love. This year also saw growth in enrollments in the courses I’ve offered through the Piscataquis Valley Adult Education Cooperative. Next year will include a “solopreneur” series for folks who want to start a business on a very individual and fundamental basis. A collaboration between the Cooperative and Piscataquis County Extension will create a “You Can” series of classes for folks interested in traditional skills (agricultural, homesteading, domestic). I’m working on a course called “Cash as a Crop” that will look at ways to raise and save money in this difficult economy. (It probably won’t include investing in real estate!)

Because of this increased emphasis on training and education, I’ve redesigned a second website that includes “brain leaks and musings” as well as information about courses I’m teaching. You can even sign up for email announcements of future courses.

My “work” with the kids continues… every so often someone will decide that being around the kids is keeping me young. I’m not so sure about that, but I do know that being with them is rewarding and I learn a lot from them. And they are definitely good for an occasional laugh. I enjoy their problem solving abilities and their view of the world.

I still believe that the real estate market shouldn’t control us; we should look ahead and consider what we need and want to accomplish. If you follow this blog you know that I firmly believe the statistics do not control us; we create the statistics by the actions we take and the skills we apply. That is also true of life. These are times when it’s easy to feel discouraged and uncertain. But just a slight shift of focus and we can look ahead and find opportunities all around us.

Thanks for your confidence and the opportunity to work with you. Do let me hear from you… and have a meaningful holiday and a new year filled with health, happiness and prosperity. The video below just might help with some Christmas Spirit.



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There’s Nothing “Fair” About Fair Market Value

 Posted by Walter at 6:58 am
Dec 132011
 

Wikipedia defines fair as “in accordance with the rules or standards; legitimate.” One of the more memorable definitions I’ve encountered was offered by a student a few years ago. He said that whenever his kids whined “Dad, that’s not fair,” he would remind them that a fair was actually a place where pigs go to compete for ribbons.

In real estate classes, I “force” students to memorize the definition of fair market value, but we also want to be sure we understand that definition because it’s a pretty important term to sellers and buyers. It’s a lengthy definition, but the core of it is “that price… which a ready, willing, and able buyer will pay…”

Arriving at the fair market value for a property involves both science and art. I’ve brought the topic up because according to a recent survey nearly three-quarters of home sellers think their homes are worth more than the price the agent determines. Where it gets really interesting is that the same survey indicates that 68% of all home buyers believe homes are overpriced. And, yes, it’s possible for both of those things to be true at the same time.

In the article I read, one professional suggests that the problem is “fixing the credit system.” There’s a leap I really do not understand. (The suggestion is that would bring more qualified buyers to the market and increase demand.)

The law of supply and demand is still at work. In general, we are currently working with high inventory (supply) and low demand. That low demand is not totally the fault of the credit system. There are many qualified buyers who are sitting on the sideline for lots of reasons. Most of those reasons fall into the category of “fear” and they are all about the future and mostly about the economy.

This all gets simpler when we recognize that homes are bought and sold one at a time. Things would get really simple if we could remove the emotion from that process. We might then be able to get those sellers who think they aren’t getting enough and those buyers who think they are paying too much together. This means we have to get price into perspective–hard to do for sellers who are faced with a mortgage payoff that exceeds the current market value.  But let’s not forget that it’s also hard for buyers who want to buy more home than they can afford.

(One concern I have that I hesitate to raise–the cost of home ownership is about a lot more than the sales price. I’m afraid that the current situation is making it very possible for buyers to buy homes they cannot ultimately afford. That’s probably a different topic. For today, buyer alert: don’t let low pricing lure you into making a bad purchase.)

 The talking heads will probably continue to over-simplify things. In truth, there’s always been a tendency for sellers to over value and buyers to under value. What makes the current situation unique is the disparity. We might do well to worry a bit less about blame and “fair” and more about buying and selling. Simple, really. Not easy.

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No Whining!

 Posted by Walter at 5:25 am
Dec 052011
 

As if to reinforce my previous post, I read a news item this morning pointing out that pending sales are up but along with that REALTORS are reporting a signficant number of “settlement failures.” (A settlement failure happens when a buyer and seller agree to a “deal,” but something happens and the sale doesn’t actually take place.) The talking heads are of course blaming this on the lenders. (By the way, the statistics on the failures are not hard numbers-they are based on a survey of REALTORS who are reporting they are experiencing the problem.)

One comment posted to the story by a REALTOR included the observation that the “entire industry is being held hostage to ridiculous underwriting standards.” I confess to chuckling a bit.

I have an idea for her. I think she should start making $100,000 plus loans, asking herself just how much assurance she wants that her borrowers are going to pay her back. My guess is she’ll want some underwriting standards, documentation, and won’t be making loans to just everybody. If she can come up with enough money, she can turn an entire industry around.

 (Just to put the lending risk into perspective, a separate article notes that in cases where the lender or federal government modified mortgages to assist the borrower nearly half are in foreclosure again anyway.)

There’s no doubt that mortgages are a lot harder to get now than a couple of years ago. Personally, I’m not sure that’s a bad thing. But to those who are whining, I would suggest that unless we are going to start opening our own banks, “it is what it is” and we (REALTORS) need to start dealing with it. Whining about it isn’t going to help one bit.

We can’t continue to shout, “It’s a great time to buy!” because it’s only a great time to buy for those who can and not everyone can.

My personal experience is that it’s not THAT difficult–there are lenders with money to loan who have reasonable expectations. Buyers (and agents) who are looking for the slam dunk are going to be disappointed. You do have to work for the mortgage and the sale. Sorry.

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Salesmanship is NOT a dirty word!

 Posted by Walter at 6:43 am
Nov 282011
 

For a long time now I’ve been “preaching” to those who will listen–”It’s high time for those of us in the real estate industry to realize we are not in the business of selling houses; we are in the business of helping people make intelligent decisions regarding real estate.” I would call your attention to the fact that I said “selling houses.” I didn’t say “We are not in the business of selling.”

Some years ago I wrote a short booklet called Salesmanship Is Not a Dirty Word. I can assure you that I’m not “anti-sales.” I happen to think that selling is an important skill–even if we have to call it something else to make it palatable. 

So this morning I read an article on RIS called Warning: Your Sales Techniques May be Under Fire. It’s actually a pretty good piece. The author notes that while brokers have traditionally been “selling information” (because of the historical emphasis on the multiple listing system) things have changed. Buyers now have all that information available to them thanks to the Internet. (I wonder how that information gets there… hmmm.)

Therefore, he somewhat rightly concludes, buyers of real estate are looking for someone to “assist and consult.” But, like all good ideas, when you push this to the extreme it doesn’t work. “No dialog, technique, or pitch needed,” he goes on to say.  That’s where the author lost me.

 This is the age-old debate–it’s not a new one based on some new paradigm. Every industry has always had salespeople who put their personal gain before their customer’s. Real estate is no different. Well, except for one thing, maybe.

If you hire me (or somebody else) to “assist and consult” with you… wait. How are you going to decide to hire me? Will you draw my name out of a hat? Should we develop software that is a random broker generator to pick your broker for you? (Banks are doing that with appraisers these days–interesting back story there.)  No, I think we’re probably going to have some dialog and while we may not like calling it that, I’m going to “sell” you on the value of hiring me.

Let’s assume, however, that somehow you do manage to hire me without any influence on my part. So if we assume I’m not supposed to use sales techniques, let’s consider what that means. If you’re a buyer and you decide to make an offer on a home I’ll just submit the offer and we’ll see where the chips fall? Or maybe you are about to make a truly “bad” decision… you don’t want me to try to talk you out of it, right?

See, when we write articles like this we can afford to be conceptual and puristic. When we’re out in the trenches we have to deal with reality.

If you’re entering the real estate market as either a buyer or a seller I think you absolutely need a broker who knows how to sell and is pretty darn good at it. Remember, it’s about perspective. He or she is supposed to be using that skill on your behalf–not on you for his or her own gain.

Unfortunately, the information aspect of this business makes it very easy to end up working with a broker without much thought. You call a number on a sign because the house looks interesting. You don’t think about selecting your broker. You’re leaving that to chance. Wouldn’t it make sense to find out what that broker’s perspective is?

I often tell students that they’ll make their biggest mistakes in the business when they are broke. Why? Because it’s about perspective. It becomes very easy to put the transaction (sale) ahead of the client when you can’t make your mortgage payment.  Just like in dating; desperation isn’t pretty. Don’t hire a desperate broker.

Customers and clients really do need a sensitivity to this–is your broker truly working in your best interest? Extreme cases are relatively easy to spot because you feel “pressured.” 

There are two questions you should be asking yourself constantly:

  1. Do I feel like I am making my own decisions with all the information and options available to me?
  2. Do I feel like my broker is my partner-working with me?

If the answer to either question is not a resounding “yes,” it’s time to reassess your relationship.

 

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Piscataquis County Real Estate Sales Increase

 Posted by Walter at 7:06 am
Nov 222011
 

I can write headlines with the best of them! I admit I thought about making this headline Piscataquis County Real Estate Sales ACTUALLY Increase. Regular readers will know that I rarely let a statistical headline go unchallenged–including my own.

The latest press release from the Maine Association of Realtors tells us that for the month of October, unit sales are up 6.78% over last year. That’s good news. That ever-so-spongy number called “median price” is down for the same period, but not much (.90% from $166,500 to $165,000). That’s also good news. While one month does not a trend make, it would appear that prices MIGHT be stabilizing a bit.

In my “home” market of Piscataquis County the news for the “rolling” quarter (August, September, and October) is good. Unit sales are up 14%. However the media price continues to be down–dropping 6.1% to $77,000.  Remember, that median selling price means half of the homes sold for less that $77,000 and half sold for more than $77,000.

Since I’m capable of creative statistics, I will usually take the number of units sold times the median sales price–admittedly an interesting but not statistically valid approach. Doing so, suggests that dollar sales in Piscataquis County also increased approximately 7%.

My non-scientific sense is that things have, in fact, “picked up” a little. But I wouldn’t get too excited.

 

Source of data: Maine Real Estate Information System, Inc. Note: MREIS, a subsidiary of the Maine Association of REALTORS, is a statewide Multiple Listing Service with over 4,600 licensees inputting active and sold property listing data. Statistics reflect properties reported as sold in the System within the time periods indicated.

 

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But is it mortgage fraud?

 Posted by Walter at 9:43 am
Nov 052011
 

This past summer the FinCEN (Financial Crimes Enforcement Network) reported a steep increase in the number of SARs (Suspicious Activity Reports) for the first quarter–a 31% increase. While some talking heads are screaming that mortgage fraud is on the rise, that’s not an accurate conclusion when you read the details. Many of these reports are about activity that took place in 2006-2007.

So once again, the sky isn’t falling. It appears, incidently, that many of the current problems are related to loan modification and debt elimination scams. While we tend to think of mortgage fraud as relating to the application and closing process, there is, in fact, another aspect where borrowers are committing fraud to reduce or eliminate their mortgage obligations.

According to the report, current reports include “activities such as loan modification and foreclosure rescue scams, flopping, and falsified claims of identity theft. Flopping occurs when a foreclosed property is sold at an artificially low price to a straw buyer, who quickly sells the property at a higher price and pockets the difference.”

So whether you are attempting to modify your current mortgage or applying for one… there are a lot of activities and documents involved. Are you (intentionally or otherwise) commiting mortgage fraud?

Just about everyone knows the old expression “if it looks like a duck…” But mortgaging is complex. A simple guideline is this: anytime your financial situation or the details of the purchase are not submitted openly and honestly, you are treading in dangerous territory. Things that might sound harmless should be questioned.

For example, if a buyer and a seller make a “side deal” with money changing hands, that deal must be disclosed to the lender. Failure to disclose all aspects of the transaction could be considered mortgage fraud.

The point here is to create awareness, not paranoia. Aggressive honesty is a good policy. Do not hestitate to question any instructions you receive that seem a little “off” and under no circumstances misrepresent your financial situation or the details of your transaction to the lender!

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