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Jack Garson on the changing real estate market

LI eyes NJ tax cut with envy

BY DAVE MARCUS
Newsday Staff Writer

William Hill, a retired real estate broker in West Babylon, read the news with a mixture of excitement and disbelief yesterday. It was a good development, he felt, but he noted a couple of problems. First, this was legislation in New Jersey, not New York. And the plan seemed suspiciously vague

"I think it's wonderful, but I don't know where communities are going to make up the money," said Hill, 69, president of the West Babylon Taxpayers Association.

Economists and policy analysts across Long Island and New York City shared Hill's very cautious enthusiasm. New Jersey and New York are the states with the highest property taxes and some of the highest school spending in the country, and taxpayers are demanding relief. So when New Jersey sneezes, New York checks its own temperature. And when New Jersey moves to lower property taxes, New York gets inspired.

"That a state in the metro region is moving to cut taxes is certainly encouraging," said Rich Guardino, dean of Hofstra University's Center for Suburban Studies. "Long Islanders are suffering from such an onerous tax burden that relief in any form would be welcome. "

The New Jersey plan offers many homeowners a 20 percent property tax cut. Wealthier homeowners get less, and families earning more than $250,000 don't get a break. The legislation, approved by both Democrats and Republicans, is being studied by Gov. Jon Corzine.

Gov. Eliot Spitzer is preparing to push his own three-year, $6-billion middle-class property tax relief. Building on the complex School Tax Relief program, called STAR, it offers the greatest breaks to the middle class. In Suffolk, for instance, families earning up to $80,000 would get an average break of just more than $760.

"The New York system needs a lot of improvement," said Frank Mauro, head of the left-leaning Fiscal Policy Institute.

He noted that the plans have several key differences. New Jersey covers renters; New York wouldn't. New Jersey is reducing all property taxes; New York wants to reduce school taxes. New Jersey has a 4 percent cap on raising tax levies; New York wouldn't.

Mauro said the cap will hurt poorer districts in the city and on Long Island. Conservatives, though, said the cap is necessary. But they are skeptical of tax relief plans in New Jersey and New York because they say the states are simply switching money from one pot to another. "When you reduce the tax price to the homeowner, it becomes easier for the school district to raise taxes faster to make up for it," said E. J. McMahon, director of the Manhattan Institute's Empire Center for New York State Policy.

In West Babylon, Hill said he is all for any kind of tax relief, especially because he just received an $8,200 property tax bill himself. But having served on the school board for four years, he said politicians are being disingenuous. "Nobody is stopping and saying, 'Look, you have the federal requirements of No Child Left Behind. That's what really puts the burden on the taxpayers. '"

Hill has seen his grown children and their friends scatter to other states, most with lower taxes - though he does have one son in New Jersey. And he says it's getting very late for any kind of property tax relief in New York City and Long Island.

"Any of the people that I've spoken to are interested in going south. They'd just as soon live in nice weather and pay a hell of a lot less in taxes."

PROPERTY TAX PROPOSAL

Highlights of the New Jersey tax cut plan:

Cut property taxes by 20 percent for households earning up to $100,000 and 10 percent for households earning $250,000.

Cap annual property tax increases at 4 percent.

Ask voters to consider merging towns.

Create a comptroller to investigate government spending.

Strip pensions from corrupt public officials.

Create county school superintendents with authority to veto school spending.

Bar newly elected or appointed officials from receiving taxpayer-paid pensions.

Should you leverage your home or pay it down rapidly?

Posted by the Asbury Park Press on 02/18/07
BY WILLIAM BINTLIFF

There is a great debate within the inner-mortgage circles these days. Should loan professionals, encourage clients to borrow as much money as possible? Or would consumers benefit more if they understood the advantages of 15-year amortization schedules and pre-paying principal? Let's examine the pros and cons of both strategies.

Leveraging Property


In order to understand why someone would want to borrow as much as possible for a home purchase, they must first grasp the concept that equity has a zero rate of return. Here's an example:

If Consumer "A" buys a home for $300,000, and puts 20 percent down, then they have $60,000 in equity. Over the next five years, the property appreciates $100,000 in value. Consumer "A" now has $160,000 in equity.

Consumer "B" buys a home for $300,000, and puts no money down. At the end of 5 years, that same home is now worth $400,000. Consumer "B" has $100,000 in equity, which is the same appreciation as Consumer "A," a net $100,000.

A down payment has nothing to do with the rate of return. What becomes important is how one chooses to manage the $60,000 not used as a down payment. If it is used for frivolous activities, such as buying toys or going to Las Vegas, it would be more prudent to use that money as a down payment, especially since this will enables the buyer to obtain a lower interest rate.

However, investing the $60,000 in a vehicle that can out-earn the cost of that debt could be a formula for success. This is why some lending professionals suggest putting as little down as possible, maximizing your tax write-off, and investing the rest. This principle has been applied for many years in the life insurance game.

The old saying goes, "Buy term and invest the rest." The key component is taking the money that would have been used as a down payment and creating an asset accumulation account. This account should earn a significant enough rate of return to pay the mortgage off entirely and achieve the ultimate goal of being debt-free.

Paying Down Rapidly


There are very few times over the course of my career that I have seen a client with zero debt and no financial difficulties. Choosing to pay off all debt can reduce stress and help gain freedom of cash flow for investment opportunities. A 15-year mortgage or a biweekly payment strategy provides structure. It can also get the mortgage paid off within a set timeframe. Simply put, it contains built-in discipline.

It's important, however, to understand that regardless of how rapidly the home is paid off, there's no greater rate of return than if it is paid it off slowly.

So how does one determine which scenario is best?

The choice depends entirely upon the individual. Savvy consumers who are disciplined, and are comfortable taking chances from an investment perspective, would do well with the first scenario. Over the course of time, it's been proven that the rate of return over the long-haul will be far greater than the rate paid for a mortgage in today's rate environment. It's important to seek the advice of a skilled investment advisor to ensure success with this strategy.

The second scenario is best for those who have a difficult time managing their money or who'll sleep easier at night knowing they have a plan in place to pay their loan off more rapidly. Be sure that your budget can handle accelerated payments. When consumers "bite off more than they can chew" with a 15-year mortgage, they frequently end up having to refinance back into a 30-year schedule.

If you find this subject intriguing and would like to know more, I recommend a book titled, "Missed Fortune 101," by Douglas Andrew. It's an outstanding read that is very simplistic and goes into far greater detail than I can cover here. The author is a financial planner who advises safe-structured investments such as whole life policies and tax-free fixed income instruments.

William Bintliff is affiliated with First Interstate Financial Corp., a Licensed Mortgage Banker, New Jersey Department of Banking and Insurance. Fora free Consumer Credit Scoring Booklet, contact Bintliff at (888) 389-9878, Ext. 136.

NY, NJ govs sign off on Freedom Tower

By AMY WESTFELDT
NEW YORK

The governors of New York and New Jersey said Tuesday they support continued construction of the 1,776-foot Freedom Tower but also would favor selling the multibillion-dollar symbolic skyscraper being built at ground zero.

New York Gov. Eliot Spitzer, New Jersey Gov. Jon Corzine and Mayor Michael Bloomberg appeared together to sign off on the delayed, redesigned skyscraper that has been under construction for more than nine months.

Spitzer, who once called the planned building a "white elephant" that could not be profitable for the government agency that owned the World Trade Center, said after he was elected governor that he would look at the project again.

He said Tuesday that a booming commercial real estate market and the need to move forward with long-delayed rebuilding at ground zero changed his mind.

"We're confident that this is not only viable, but profitable," said Spitzer. The federal and state government has promised to lease half of the tower's office space and the skyscraper -- which will cost more than $2.4 billion to build -- is on budget, he said.

But Spitzer added, "I don't have any opposition" to selling the tower, which the Port Authority is scheduled to finish building by 2011. "We will entertain these options if and when they arise."

Corzine said that selling the tower "would be good public policy." He said the Port Authority, which is run by both governors and owns airports, shipping terminals and bridges, should stay focused more on transportation than real estate.

Private investors have recently come to the agency with interest in ownership and development rights for the skyscraper and a second tower under the agency's control, Port Authority officials have said.

The agency agreed to build and lease two of the five planned towers last year when it renegotiated its lease with private developer Larry Silverstein, who is building three other towers on the site. It is sharing more than $7 billion in insurance proceeds and tax-exempt bonds to rebuild office space destroyed by the Sept. 11, 2001, terrorist attack.

No design changes are foreseen, despite critics' complaints that the tower's height makes it too much of a terrorist target and that a 20-story, windowless base makes the building look too forbidding.

The base "speaks less of resilience and tolerance than of paranoia. It's a building armored against an outside world that we no longer trust," wrote New York Times architecture critic Nicolai Ouroussoff in a column on Monday, urging that the building be redesigned.

Spitzer called the design a compromise "between the security needs that are real and pure aesthetics."

"I don't think it will look like a fortress," Bloomberg said. "There's nothing wrong with taking appropriate security actions."

To Lower Property Taxes, Keep Kids Out

As local governments in New Jersey look for ways to lower sky-high property taxes, one idea has caught on: build communities that don't allow kids.

Age-restricted housing expands the tax base, but without the exorbitant cost of education (schooling for one child in New Jersey costs an average of $12,567 a year). The state is now home to one-fifth of the country's adults-only housing, making New Jersey the leader in a national trend fueled by baby boomers' seeking new homes after their children move out.

"[Exclusionary zoning] is pervasive in a lot of parts of the country, especially in the Northeast, where there isn't a lot of land to build on," says Robert Puentes, a fellow with the Brookings Institution's Metropolitan Policy Program. "With property tax being such a big issue now, it's much more front-and-center."

Nationwide, 2.8 million households were part of age-restricted communities in 2005, up 29 percent from 2001. As many as 95,000 such units will be built in the United States this year, according to an estimate from the National Association of Home Builders.

Detractors say age-restricted housing swings the balance in a community toward a population of senior citizens, whose need for healthcare services can quickly cost just as much as schools.

Two States Take Title for Worst Tax Climate

Aggressive state auditors and inconsistent tax regimes — most notably in California and New Jersey — are responsible for corporate tax directors’ headaches, according to a survey of corporate tax officers.

The 2007 CFO State Tax Survey,the fifth since 1996 conducted by CFO Publishing, asked corporate tax officials about states’ handling of a number of tax issues, including the fairness of their audit department and the independence of their appeal process.

California was judged as having the worst overall tax environment, narrowly beating New Jersey for the distinction. Both states were considered the worst offenders in nearly every category.

California was also considered the most aggressive state in levying sales and use taxes, while respondents said New Jersey was the state with the least fair auditors. Additionally, New Jersey’s ongoing fiscal crises and hikes in sales taxes were considered disincentives for corporate relocation or expansion in that state.

Among rankings for states having the best tax environment, which the survey describes as being the “most fair and predictable,” were, Nevada was first, followed by: Delaware, Wyoming, South Dakota, and Alaska.

A state’s overall tax climate also weighs heavily in corporate decisions to move to a state or expand operations within a state.

States with the most positive influence on corporate relocations and expansion
Nevada
Delaware
Wyoming
Oregon
Virginia

States with the most negative influence on corporate relocations and expansions
New Jersey
California
Massachusetts
New York
Pennsylvania

Leads Are What You Make Them: A Door to Every House

By Rory Wilfong & Dave Conklin with Mark Boyd - Part 1 of 3
Feb. 20, 2007-Rory Wilfong and Dave Conklin say enough is enough. The GetMyHomesValue.com co-founders say if you're not happy with where your career is as an agent, it's time to stop blaming the market or "bad" leads. It's time to start looking in the mirror, they say.
"We started this business when we were agents," Conklin says. "Rory and I became successful in real estate rather quickly because we always follow up. Not just once or twice…sometimes it's over the course of a couple of years. Every lead is different."
"Leads are what you make them…whether you get them from the Internet or from your mother," says Wilfong. "We're finding way too many articles that pretty much tell agents they shouldn't have to put out any extra effort to be successful. This is a disservice to all the veteran agents who have made real estate their long-term career."
Adds Conklin: "They're career agents because they know what follow-up is about and they have a follow-up system. They're not afraid of rejection. Most agents are not proactive…they don't want to call a lead 3, 4, 10, 20 times and they never go to the house. We hear it all the time. They don't want to do the things it takes to be great in sales. The funny part is that it's easy!"
One of the more popular recent statistics claims that only 3% of Internet leads turn into closed deals, a statistic that brings both chuckles and frustration from the two.
"So, does that mean only 3 percent of Internet seller leads sell their house? That's ridiculous," says Conklin. "It's more like 30 or 40 percent…but only if you follow through with your follow-up."
Indeed, according to realtytimes.com of more than 1 million leads captured online:
7.3% sold within 3 months22% sold within 12 months40% sold within 28 months
"Agents just have to remember there's a door to every house and if it's not knocked on, they have no idea if it's a good or bad lead," cautions Wilfong, "You have to shake that person's hand, then be the judge. How many owners of this type of business can say they successfully used their own product? Dave and I have done it, and there's no great secret to success in this field. It's about never being forgotten. These agents who don't get the results they want just don't know how to not be forgotten."
Conklin and Wilfong say there is not enough sales and marketing education in the certification process, and many agents just don't know what to do once they're certified.
"When I first started, I got my first listing within 30 days," remembers Wilfong. "because I wasn't at my desk in the office playing solitaire or talking about last night's Sixers game with everybody. I was busy making contacts and prospecting. Most agents don't follow up and prospect properly because they're either too scared of rejection, have no idea how to properly follow up, or are just too lazy to do the work it takes to nurture prospects."
"If Rory & I were to become active agents again, we would subscribe to a lead generation service," adds Conklin, "but we wouldn't expect to make any money for six months. The problem is most agents expect to make money next month with the people they meet today. It rarely happens that way. The Internet has made it easier for buyers and sellers to find agents very early in the game, whereas a person used to just come to the real estate office when they were ready to act."
Next week: (Part II) Leads Are What You Make Them: What is a 'Bad' Lead?
Together with partner Steve Young, Rory Wilfong and Dave Conklin co-founded GetMyHomesValue.com in 2003 to provide lead generation, coaching and other services for real estate professionals. The company is based in Lancaster, PA.

What Is Your Exit Strategy?

Form alliance with up-and-comers to cushion your retirement
By Marlin Cone
Feb. 20, 2007-When you made the decision to get into the real estate business, did you consider how you were going to get out of the real estate business? Did you consider that all the work you would be doing to build your identity, i.e., your "brand," and your contacts, i.e., your sphere of influence (SOI), might be of value in the future?
This article might appear to be directed only to those agents who have been in the business for several years-but, it is not. It is also directed to the younger, less experienced agents and to the brokers managing both.
For more experienced senior agents, do you think the reputation you have built in the marketplace (i.e., your branding) and the database you have developed for your SOI would help someone else (i.e., another younger, less experienced agent) add value to their business? What do other agents you know do as they move towards the end of their real estate career? Do they just turn the key and walk away from all the value they have created with their hard work, advertising, marketing and networking? Or, do they bring younger people into the business with them, train them and then sell their "book of business" to them?
You are overlooking a huge opportunity to establish a nice retirement "annuity" for yourself if you are not positioning yourself and your business for an exit whereby another active agent can take over when you are ready to move into the next stage of your life. And, you are depriving some anxious younger, less experienced agent the opportunity to leverage what you have already created at a much lower cost than they could develop the same "book" of business the conventional way. It is very expensive, as you know, to establish branding and to acquire a database which you can legitimately call your SOI.
The average age of NAR members in 2004 was 55, then dropped to 52 in 2005 because of an influx of younger people into the business who believed they could be millionaires by just putting a sign in the yard and then waiting for the phone to ring. But the average age shot up to 57 by the end of 2006, and why? My bet is that the "adjusting" market during 2006 was more than many of the "newbies" could handle financially and/or emotionally-and that there was a significant exodus of younger agents from the business. The statistics don't lie.
I think this situation creates a dilemma for the real estate business. The largest group of buyers of homes these days is Generation "X" and "Y"-those in their 20s and 30s who were raised with computers and cell phones. So if the average age of the largest group of home buyers is 35 and the average age of NAR members is now 57, do you think there might be a generation gap here? There's a gap on how these two groups embrace, address and utilize technology; there's a gap in how these two groups choose to conduct their business and live their lives.
My suggestion for you is that you proceed now to forge a strategic alliance of some type with a younger, less experienced agent with whom you have solid compatability in an approach which will be "win/win" for you and that agent. You can have comfort that you have not just thrown away all the value of the business you have developed over the years and that the younger, less experienced agent can jump start their business to a much higher level in a very short time frame. And, you can give that younger, less experienced agent a wealth of experience which they would be paying a lot of money to acquire through many of the real estate training organizations over a much longer period of time.
For the younger, less experienced agents, having worked out a purchase arrangement like the one above will help see you through the market adjustments that we've been experiencing the last several months. Such an arrangement will also help you take your business to a higher level where you can begin to realize more economies of scale. It will also position you to take advantage of the upswings in the market instead of leaving the business and watching a new group of agents enter the market and take advantage of the upswings.
And, brokers, isn't it in the best interest of the stability and longevity of your company to proactively "broker" strategic alliances between the senior, more experienced agents who might be wanting to define their exit from real estate, with the younger, less experienced agents? Are you doing something about this, or are you just sitting on the sidelines watching the game play out in front of you? You should be the "coach" orchestrating the way the game is being played and have a positive impact on all three parties: the senior, experienced agent, the younger, inexperienced agent and your company.
In future articles I will be addressing different types of arrangements which have worked well for others who took the "bull by the horns" and moved forward with action on this situation in a way which has yielded the desired "win/win/win" scenario. I hope you get inspired to do something for your business before it is too late.

How To: Searching Tax Records

Here is the first part in our HowTo series:HowTo: Searching Tax Records

The purpose
of the HowTo series is to educate home buyers. While I'd love to hang
around the blog helping everyone hunt down information, I realize that I
can probably help everyone much more by showing you HowTo find the info
you need.

The first part in the series is HowTo track down
public tax information. The public tax databases contain a wealth of
important information that will help you become educated homebuyers.
Until recently, searching the tax records involved a trip down to the
county records office, and probably the better part of an afternoon. Not
anymore, with just a few clicks I'm going to turn you into Sherlock
Homes (what a terrible pun).

First, here are the links I use:


Morris County Tax Board


Monmouth County Tax Board


www.taxrecords.com


Bergen County Tax Board (taxrecords.com database)

Why so
many links? Open them up, take a look, not every site has the most
up-to-date database, and some sites (like Monmouth) allow you to search
more than one county.

So lets begin:

1) First we
need to find the address of a home we are interested in. For this we'll
go over to ForSaleByOwner.com, you can use the link over to the right of
the page if you would like to support the site (I'm still waiting to
make my first penny off those by the way).

2) At the top of
the page there is a section called "Buying a home", lets type in Madison
for the city, and use NJ for the state, click go.

3) Choose
listing #20527608 ($599,000). Not every home has past sales records, if
the home was owned for a very long period of time, it's possible that
you will not find past sales records. Also, if the home is new, you may
not find sales records. I picked Madison at random and chose this
listing at random (but verified that it indeed had sales data).


4) Grab the address, the address is important, it's the key we'll be
using to search the databases (for those that would rather not go to
forsalebyowner.com, the address is "36 Albright".

5) Click
the link for the Monmouth Tax Board, you'll see a page with a somewhat
complicated form, don't be scared, it's easy.

6) Select
"Morris - 2005" as your County, Select "Madison Borough" as your
District, and Select "Advanced Search" as your Search Format.


7) Scroll down the page until you see the field marked "Street Addr",
type in "36 Albright", the street suffix is not necessary (and I find it
throws off the search on some tools, so don't bother). Scroll down to
the bottom of the page and click the "Search" button.

8) You
should be rewarded with a single entry returned. Click the "More
Information" button on the left side of the record.

9) This
is it, you've done it. We see the owners, we can verify what they paid
for the home and when they purchased it, the assessed value and what the
taxes are.

10) Click your back button twice to return back to
the search screen. This time, we'll only use "Albright" as the Street
Address. Why? Because we'd like to see the other properties in the
neighborhood.

11) Now we'll go through the Morris County Tax
Board site. Why? You might like it better, it might be updated more
recently, the Monmouth Site might be down, It doesn't matter, just go.


12) At the top of the page you should see "SR1A's", hover your mouse
over the button and you'll see "Search SR1A's" pop up, click it.


13) Click "Search SR1A's By Property Location" under "Select Search
Critera". A box should pop up with a handful of fields.

14)
Under District select "Madison", enter "36" for House Number and
"Albright" for Street Address. You can leave SR1A Year blank. Click
"Search".

15) Bingo, you'll see a similar record as we did in
the first search. You may need to scroll the browser window to the right
to reveal the "Detail" button. Click it when you find it. You'll see
much of the same info as you did before. You can go back and click the
"Tax" button if you'd like some more information on the property or tax.


16) I'll let you go through the Bergen and taxrecords.com sites on your
own. Most of these follow the same pattern, so once you've mastered the
search, you'll be comfortable on most any tax search database.