Monday, October 1, 2012

Health Care Reform to Hit Luxury Market


Whether you agree with ObamaCare or not, few buyers and sellers of luxury homes probably realize that one provision of the law could drastically impact their bottom lines.

However, with the Supreme Court’s sign-off on the Constitutionality of the law, more and more of the fine print is becoming clearer. As it turns out, some of that fine print impacts capital gains for individuals with more than $200,000 in Adjust Gross Income (or $250,000 when filing jointly) who sell a home for a profit exceeding $250,000 (or $500,000 when filing jointly).

This applies to almost ALL Westside Los Angeles homeowners.

In fact, it will also apply to an even wider pool of sellers in the years to come. The reason? The AGI threshold I just mentioned is not indexed for inflation. So as the economy improves, more and more individuals will enter this bracket.

The fine print we’re talking about is a 3.8 percent Medicare tax on capital gains exceeding the $250,000/$500,000 threshold on the sale of a principal residence. In other words, if you sell a home for a $1.25 million profit, $1 million of that profit will be taxed at 3.8 percent.

Look at it this way: Every $1 million in profit will cost the seller an extra $38,000 in taxes.

As agents, we’re not in the business of advising our clients on tax issues. After all, unlike their business managers and accountants, we don’t have a complete picture of their resources.

Our job is to manage expectations and price homes appropriately. There’s little doubt that this new tax will take more money out of sellers’ pockets, while hurting the value a buyer’s new home. In other words, this is bad news for luxury home values on the SoCal luxury market.

The news is even worse for buyers and sellers whose agents don’t understand the marketplace or how the industry is impacted by the shifting political winds. At Westside Estate Agency, we place a high premium on appropriate pricing. We know that this new tax policy will have an impact and we will help our clients plan accordingly. 

That’s the WEA Way.

Tuesday, August 7, 2012

Facts vs. Fiction: WEA Brokers and Real Estate Chains

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Unlike some of the big corporations that list homes in Los Angeles – names like Coldwell Banker, Sotheby’s, Prudential and Christie’s – you won’t see any big national advertising campaigns from Westside Estate Agency.

The reason?  Those campaigns don’t help us sell your home. The vast majority of luxury homes are sold to local buyers. Despite what the ads say, no one is better positioned to help you buy and sell luxury real estate in the Los Angeles area than WEA. To help sort out some of the claims made by those big-name conglomerates, we’ve put some of their claims to the test. 

Claim: The brokers at national chains have more experience and ability
False. First and foremost, independent brokers have built their success on their merits, not the coattails of a brand. We’ve assembled a team of brokers – hand selected by WEA’s founders – who share WEA’s philosophies and handle every negotiation with intelligence and integrity to meet the very high expectations and individual needs of our clients. Those big corporations will hire anyone they think can make a quick sale – even if the buyer is a relative of friend – and then just go away. 

Claim: Sellers benefit from a chain’s network of regional offices
False.  When franchises brand themselves as offering more reach than independent brokers and tout their extensive global networks, this is lip service and not reality. The only limits that exist are the big chain’s own requirements of their own brokers. WEA brokers are free agents, adept at working with all parts of the industry (franchises, other independent brokers, auction houses, etc.). We work with dozens and dozens of national and international websites that reach an exponentially larger buyer network than a single chain’s regional offices. 

Claim: Sellers benefit from a chain’s national marketing budget
False. Though big chains spend a large portion of their fees on print/TV advertising campaigns promoting their brands, the actual homes are secondary to their brands. The successful independent brokers at WEA are able to spend focus their efforts on marketing and sales strategies that are most effective at the local level and have the greatest impact on the sale of your home. What’s more, chain brokers own their own ancillary business – such as title companies, escrow and mortgage brokers – and push clients to use their services. Their agents are coerced to use these affiliates not because they are the best, but because they’re profit centers. 

Claim: The fees you pay go farther with a national chain
False. WEA has local ownership that can make critical decisions on the spot and on the basis of individual needs. Because WEA does not have to run each and every decision by corporate office, we are able to make decisions and utilize only those tactics that are most effective for each property and every client in the neighborhoods we service. In addition, we only receive commission on the transaction and don’t get paid for pushing extra services. As a result, our clients know that we are only recommending what is best for their individual needs.

Wednesday, May 23, 2012

Looking for a tech savvy realtor to sell your home? Think like a buyer


Anyone who has ever bought a home – or even shopped for one – won’t be shocked by a recent survey of homebuyers by The Real Estate Book. Fifty percent considered mobile tools to be an essential part of their home search. And of those:

·         98% percent thought their mobile device was a valuable tool
·         78% viewed photos and videos of homes on their device
·         68% sought out a listing agent based on their mobile search

Given that more half the buyers out there are using technology to do their shopping, a tech-savvy agent will have a much better chance of selling your home quickly and for the price you want.

So how do you shop for a tech-savvy agent? Think like a buyer.

That means look at how a prospective listing agent is using technology to marketing properties like yours. Think like a buyer and experiment with common technologies and web tools to make sure your property will be universally searchable, presentable and viewable.


Is it searchable?
Find a similar property listed by your prospective agent and test it out. (If you can’t find a similar property, chances are the agent is wrong for you.) Do Google searches. In fact, do searches using all search engines and see where the agent’s website comes up? Visit the property and, based on what you see from the street, see how difficult it is to access additional information on your smartphone and tablet.

Is it presentable?
Once you find additional information, does the prospective agent’s use of technology properly market the property? Are images presented in a tasteful, user-friendly way? Are video tours available? Are they professional? For higher-end properties, are aerial video and photography used? Our agency has even used video shot from remote-control drones as part of our marketing videos.

It is viewable?
Make sure all the bells and whistles available on the listing agent’s website can be accessed using all mobile tools. Our agency has converted our site to HTML 5, which ensures all images and videos and other information is easily viewed on tablets, smartphones, PCs or any other device without installing special software. In other words, you can see the same easy-to-navigate site on any device quickly and easily,


These criteria are, of course, just one small piece of selecting the right agent. You will also need someone who knows the market and your neighborhood, and has a history of selling homes quickly and achieving the sellers’ asking price.

But when it comes to finding a tech-savvy agent to sell your home, you must think like a buyer.

Monday, March 19, 2012

Honorable Borrowers Pay for Housing Market Collapse -- LABJ Op/Ed by Stephen Shapiro


I can finally say it: Things are getting better in the L.A. residential market.

But not for everyone. In fact, in many cases, not even for those who are fiscally responsible.

It’s true that compared with a few years ago there are less foreclosures on high-end luxury homes on the Westside. Most troubled sellers have sold or otherwise restructured their mortgages, making troubled homes scarce as foreclosures reach their bottom.

But today, after spending 35 years in L.A. residential real estate, – I’ve learned that numbers don’t tell the whole story. Unfortunately, in an election year, numbers are also motivating poorly conceived public policy that rewards the bubble’s most irresponsible borrowers while honest homeowners suffer the consequences.

 Read more:


Tuesday, February 21, 2012

Where is relief for responsibility?

There is a conspicuous absence in policy discussions about mortgage and foreclosures: Relief for responsibility.

Before the housing crisis, homeowners frequently bought houses with no money down and, in some cases, even walked away with a cash rebate. When they later faced foreclosure – a process that frequently takes two years or even longer – the homeowners continued to live in their homes without making ANY payments during this procedure therefore living for free for many, many months. Yet, most of the national focus has been on providing relief to these foreclosed former homeowners who most will admit that should never have been qualified to borrow these funds.

Meanwhile, responsible homeowners whose values have decreased, in part to the huge numbers of foreclosures reducing these values are struggling to make their payments because they can’t get qualified for the current lower interest rates– are footing the bill. We are rewarding the cause of the problem and doing nothing to aid those who are paying their mortgages responsibly even though their rates are frequently double the current rates available.

In the real estate industry, like most businesses, we understand the importance of return on investment. Buyers and sellers expect their investment in a realtor to produce the best deal possible. Likewise, when marketing a property, our bottom line depends on investing in tools that efficiently produce the best results.

Taxpayers, like business owners, should measure the return on their investment and ask for relief for responsible homeowners who are struggling. To me, that’s a much safer investment.

Thursday, February 2, 2012

Be Picky!

Now that prices are down 30 percent and transactions are half of what they were at their peak, there are a huge number of agents – thousands on the west side of Los Angeles – working a much smaller pool of listings. The good news for buyers and sellers: You can be a lot pickier than in the past.

When you consider that the commission rate is uniform throughout most of the industry, then you don’t retain an agent based on price. It’s important that you do your homework to ensure you’re getting the most for your sales commission.

The top 5 questions I would ask before hiring an agent are:

1. How much experience do you have with properties such as mine?

2. How much attention can you pay to my property? In other words, is it one 1-of-10 or 1-of-50 that you current have listed?

3. Will you handle the showings yourself or pass them off to an assistant?

4. How familiar are you with the neighborhood where my property is located?

5. Since the real estate industry has become much more tech savvy, how will you market my property using new technologies and techniques? How many websites will my property be available on, and in what countries? Is your agency website easily negotiated and easy to find? Does it perform well in search results?

WEA's use of new technology to sell real estate can be seen in this clip from CBS-Los Angeles:


By comparing the answers you receive, you will begin to get a sense of the level of commitment an agent has to your listing, as well as how innovative he/she is as a salesperson.

Tuesday, January 31, 2012

Market Improvement: How Will We Know?

I was disappointed that more attention wasn’t given to foreclosure realities and rebuilding the housing market in the President’s State of the Union address. The President’s proposals for refinancing underwater mortgages and investigating abusive lending practices focus on the fallout from the current crisis. But they don’t have any influence toward making the market better.

So the question everyone seems to be asking: How will we know when the market is better?

To me, it will be when homeowners quit buying down as a means to save money or stave off foreclosure. When most sellers are again choosing to sell their homes as a means to purchase something more valuable, it will be a true sign of market strength.

At WEA, we have a unique perspective on market strength because so many of our buyers and sellers are repeat customers. We have long-term close relationships with clients, as well as the properties themselves. We see the same people and the same estates over and over. As a result, we have insights into the reasons a property is being sold and where both buyer and seller are headed next. When both are moving on to bigger and better things, I become quite optimistic. When they continue to buy down or out, the light at the end of the tunnel is much more distant.

In the meantime, luxury realtors have a responsibility to address the realities that exist in our market. At WEA, we place a high premium on working with sellers to balance their needs with the realities that exist in the marketplace. Through appropriate pricing and focusing on each luxury homeowner’s long-term needs, we reinforce ourselves and our industry.

That’s the WEA WAY.