Feb 242017
 

One of the challenges we face in real estate courses is making certain our content is current. Come to think of it, that’s a challenge for real estate licensees as well!

There’s an old story claiming that someone once asked Albert Einstein for his phone number and he had to look it up. He supposedly remarked that “an intelligent person doesn’t store information, he knows where to find it.” That makes some sense and carries with it the importance of knowing what we don’t know so we do not give out false information. Einstein had the confidence required to admit he didn’t know the answer to what many would consider a fairly simple question.

So if I asked some number of licensees (particularly those who recently completed the sales agent or associate broker course about the Maine Nonresident Withholding Tax on real estate sales, I suspect many would give an incorrect answer because some rates changed for 2017. When Ben Franklin opined that “In this world, nothing can be said to be certain, except death and taxes,” he didn’t mean the amount would be certain–just the existence.

You’d be correct (well, nearly) if you cited the default calculation as 2.5% of the purchase price. “Nearly” is added because the withholding only applies if the sales price is $50,000 or more.

You might also remember there are some alternative calculations and that each requires a waiver from the Maine Department of Revenue. One of those calculations is based on a “small profit.” Those are the rates that have changed for 2017. With a waiver, the seller may be allowed to have the smaller of the two amounts (2.5% of the purchase price, 10.15% of the profit for residential) withheld.

If you think this is starting to get complicated, you get a sticker. Like Einstein, you may be concluding the best answer to the question “How much is the Maine Nonresident Withholding?” is “We’d better look it up.” Actually, an even better answer is “We’d better consult a tax specialist.” (If your client doesn’t have an accountant or tax advisor, like Einstein this might involve a phone book or its Internet equivalent.)

From an estimating point of view, the safe calculation is the default calculation of 2.5% of the sales price. After all, that is the most the seller will have withheld. If your client is a “do-it-yourself” type you can offer him or her the link to the Maine Revenue Services Website. It’s a very user-friendly place with lots of information and all the forms one may need. (Forms and information use the abbreviation REW-Real Estate Withholding.) Note that any request for a reduction in withholding must be made at least five days before closing.

While there’s no minimum on how helpful we should be with our clients, there may be some limitations when it comes to the amount of knowledge we have–particularly in areas such as taxes that extend beyond our area of expertise. Personally, I think a client who is a nonresident of Maine needs to know he or she may be facing at 2.5% withholding from proceeds at closing. We can and should also explain that there are alternative calculations, waivers, and exemptions and these should be discussed with a tax professional well before closing. In the interest of accuracy, perhaps “the less said, the better.”

Another option might be to provide all nonresident sellers with the Notification to Sellers of Withholding Requirement–it could become part of your listing packet and be included on your listing checklist.

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Safety Alert

 Posted by at 5:54 am
Feb 152017
 

The Maine Association of REALTORS® has been made aware by the City of Bath Police Department that a male with an extensive criminal history of theft and fraud (Christopher Heath) has been contacting REALTORS® in the Bath and Hampden areas over the past week. This person has claimed to be a retired firefighter and a potential cash buyer looking for upscale properties. He has a history with law enforcement in Florida, Washington, Virginia, Vermont, and New York and may be accompanied by a female. Please contact the Maine State Police or your local law enforcement if you have had any suspicious interactions with this couple.

A best practice reminder for REALTOR™ safety: Always schedule first meetings with new clients in the office, verify their identity (take a photo of their driver’s license), and introduce them to a colleague.

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Feb 112017
 

Knox-Lincoln Soil & Water Conservation District is sponsoring Maine Forest Service District Forester Morten Moesswilde for a free evening talk, “Stumped About Tree Growth? Understanding Maine’s Tree Growth Tax Law,” at Rockland City Hall on Thursday, Feb 16 from 6:30 to 8:30 pm. This program is free and open to the public. No pre-registration is required – just show up!

Moesswilde will provide details about the why’s and how’s of Maine’s Tree Growth Property Tax program, which provides eligible woodland owners with reduced property tax valuations if they commit to managing the land long-term for forest products.

The Tree Growth program has broad participation from small to medium-sized woodland owners across midcoast Maine and beyond, yet sometimes generates misconceptions and misinformation about what it actually involves. With an annual deadline of April 1 for new enrollees and some re-certifying parcels, landowners who are considering enrolling, or who are already enrolled and need to find out more, should find this program helpful in understanding their options and responsibilities under Tree Growth.

Moesswilde will present the basic provisions and requirements of Tree Growth, and allow time for questions and discussion of specific situations. In addition, he will discuss further resources available for landowners including free “walk and talks” on their land with a Maine Forest Service (MFS) District Forester; assistance with woodland planning; and publications on a variety of topics – as well as additional upcoming workshops. The Maine Forest Service is part of the maine Department of Agriculture, Conservation & Forestry, and provides numerous resources, assistance, and presentations about trees and forests in Maine, including owning, enjoying, planning for, and, where desired, harvesting forest products on woodlands.

For more information, contact Knox-Lincoln SWCD at 596-2040, hildy@knox-lincoln.org or MFS District Forester Morten Moesswilde at 441-2895, morten.moesswilde@maine.gov

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Jan 172017
 

A question we often hear from potential sellers is whether or not they should renovate or otherwise improve the property before selling. While there’s no one correct answer (except “it depends”), most licensees will recommend some degree of “freshening” — cosmetic improvements that might fall under the headings of staging or curb appeal.

But what about the “bigger” stuff? Should we remodel the bathroom?

Every year Remodeling Magazine reports the results of research designed to determine which projects have the greatest dollar return. The results of the most recent survey are reported on REALTOR.COM and might surprise you. While sexy renovations may help with the sale, it doesn’t necessarily mean a great increase in value. The top return was attic insulation–statistically it returns more than the cost.

We ought to bear in mind (and explain to prospective sellers) that the value of the improvement shouldn’t simply be measured in dollars, but having some data beats pulling our opinions out of the air. If you look at the chart, note also there are regional differences. Also, pay attention to what people are saying. I know when I talk with folks who are buying and selling two things that come up consistently are “energy efficiency” and “aging friendly.” It shouldn’t be a surprise to hear that in Maine where we have an aging population and some mighty cold weather.

One of the funnier questions I had a few years ago came from a young couple who wondered, “Should we remodel and add a bedroom if we’re planning to sell in ten years–will we get back the money we spend?” That’s some strategic thinking! In this case, they ultimately decided ten years living in a home with the additional bedroom would be worth spending the money–even if the long-term payback wasn’t guaranteed. There are too many “it depends” to answer the dollar question with any degree of certainty.

Seth Godin recently wrote a piece (Economics Is Messy) about the difference between value and profit. When considering the “Should I renovate…?” question, it’s an important distinction. The average dollar “return” on improvements is about 64%, making most improvements a loss if we only measure in dollars. When we look at the value we include factors like how much more salable the property becomes and how much pleasure the current owner will reap from the improvement. Those factors add value and may well offset the lack of dollar profit.

 

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Dec 292016
 

It’s that time of year when cars occasionally need help getting started in the form of a jump or boost that puts more power into the process. If you’ve been “thinking” about a career in real estate, now is a good time to put some power to your thoughts and dreams by taking the Sales Agent Course starting on January 25, 2017 at the Ramada Inn in Bangor Maine. *

This is a live (and lively!) course… admittedly intense and demanding–most students concede they didn’t realize how much there is to learn. But our material and teaching methods have a proven track record. Alumni Renee Jarvis says, “I enjoyed the way Walter taught the subject matter so it would be understood and not just memorized.  I truly love Walter’s teaching style…”

For additional information, course dates, and to register online, visit the Arthur Gary School of Real Estate Website or call the school at 207 856-1712. If you have questions about course content or a career in real estate let me know–I’ll be happy to help!


* The state of Maine requires that a person pass the 55 hour Sales Agent course and a state exam, both with a 75% or better, in order to qualify for a Sales Agent license. Our 55 hour Sales Agent course covers all of the material required by Maine License Law and Rules to qualify for a Sales Agent license.

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Dec 272016
 

I’m sorry I don’t know where this home is… but it’s different! It’s a house turned on its head!

I recently read an article about the business model of real estate brokerage that suggested we are, in general, bolting technology and “new” practices onto a fundamentally outdated model. One company (they’re almost always in California for some reason) has indicated they are “turning home selling on its head.”

The company’s stated mission is “to simplify real estate” and their website goes on to explain, “Moving is one of life’s most stressful events, with months of uncertainty. We believed we could empower people with a simpler, more thoughtful approach to selling their house and buying their dream home.

That’s not just rhetoric. They claim it’s possible to offer a seller a closing in three days from first contact. You read that right, three days.

But wait, there’s more! How about offering buyers a “30-day guarantee.” In simplest terms, if a buyer is unhappy with their purchase during the first month, the company will buy it back!

If I’ve piqued your interest, you’ll want to explore their fairly simple website–it’s very clean and to the point. Thier approach is certainly not for everyone–it appears to require significant capital and currently is offered only in major metropolitan areas. But it’s the sort of thinking that could revolutionize real estate brokerage as we know it.

OpenDoor Website

“Chance favors the prepared mind.”

Louis Pasteur

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Let’s Make Some Beauty!

 Posted by at 7:39 am
Dec 242016
 

Three years ago chance circumstances meant a last minute opportunity to invite two young friends to attend a Christmas performance of the Nutcracker with us.  We had a grand time and ultimately decided we would at least in some form repeat the tradition the next year. When we started discussing our plans, I’ll admit that I was a bit surprised when the girls’ choices were all repeats of what we’d done the first year. They wanted to attend the same performance and go to the same restaurant–even to order the same food! Their explanation was “It’s our tradition.”

I joked that I didn’t realize it was possible to establish a tradition by doing something once. But why not? After all, this is a season of traditions. Our annual event changes very little. We’ve all come to look forward to what some might see as repetition, but there is comfort and much excitement in it.

Another tradition is counting the number of houses decorated with Christmas lights on the way to the theater. The Christmas Season is about sights and sounds and, in a word, beauty.  It’s a time to engage in tradition and enjoy the opportunity to see and hear beauty that ranges from a ballet to decorating our homes to how we (well, some of us) wrap gifts. For some, baking cookies becomes an art form. This truly is a season of beauty.

Several weeks ago I paused to stuff a few dollars into a Salvation Army kettle. When I commented that his kettle was pretty full, his smile widened as he said, “It’s the third one I’ve filled one today.” We chatted for a few minutes and I learned that this young man schedules his vacation every year so he can be a bell-ringer.  That’s just as beautiful as the music and decorations.

Last year I stood and listened to over 200 individuals perform the Hallelujah Chorus from Handel’s Messiah, accompanied by a symphony orchestra. It gave me chills. This year I got to hear some high school kids (the Mount View Chamber Singers) perform a cappella and was equally moved.

Beauty comes in many shapes and sizes.  While it wasn’t meant as a Christmas gift, I have a paper captain’s hat sitting on the shelf in my office. The kid who made it for me labeled the brim “Captain Boomsma.” As paper hats go, it’s a nice one. But the real beauty for me is that he made it for me and gave it to me.

My wish for you is that you see and experience much beauty during this season of opportunity. Make seeing and experiencing it a tradition (habit). Your world will be a better place.

My wish for the world is “Let’s make more beauty.” There will be no winners and there will be no losers. We’ll make our world a better place.

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