Why generic analytics reports and tools won't do

Clear presentation of relevant data crucial for seeing the big picture

BY GAHLORD DEWALD, WEDNESDAY, SEPTEMBER 19, 2012Inman News®

The Space Shuttle Columbia reentering Earth's atmosphere on Feb. 1, 2003. Image viaNASA/Wikimedia Commons.

Digital analytics -- measuring human behavior in the digital realm -- can be used in many different ways to help business owners make better decisions. This includes real estate agents, brokers, franchises, and the army of vendors and consultants who serve them.

Increasingly, there are tools and charts and dashboards and infographics scattered throughout any business decision-making activity. Some of these tools and charts are useful. Some are decorative. Some are merely marketing pitches insidiously dressed up as meaningful data.

Today, the first encounter with analytics for many business owners is either the generic Google Analytics dashboard or some other vendor-produced tool. While I am a big fan of Google Analytics, I think that it is unfortunate that so many start this way.

Homebuyers pay for 'raids' on Fannie and Freddie

Commentary: Mortgage surcharges let lawmakers keep pledges not to raise taxes

BY KEN HARNEY, TUESDAY, SEPTEMBER 11, 2012 Inman News®

Chest of money image via Shutterstock.

There's an ominous trend taking shape below the headlines in Washington this political season that anyone involved in home sales, financing or building should keep an eye on.

It's called raiding the cookie jar of the helpless: squeezing more money for federal purposes out of the home lending process without calling it a "tax" by jacking up fees at Fannie Mae and Freddie Mac.

After a raid, consumers purchasing homes or refinancing end up paying relatively small amounts extra in mortgage fees -- adding anywhere between one-eighth and one-quarter of a percent onto their loan rates. Hardly anyone's the wiser because the surcharges show up nowhere in the process.

But with 60 percent-plus of all new mortgages now being funded by Fannie and Freddie, the extra amounts raised by mortgage fees rapidly can total into the tens of billions of dollars over extended periods.

The danger of new fees tacked onto conventional mortgages stems from two developments: first is the looming "fiscal cliff" facing the federal government by year-end, when Bush-era tax cuts expire and disastrous cuts in spending kick in.

Second, there is a perception on Capitol Hill -- a correct one -- that the two giant companies now under government control have no one left to protect them from financial assaults. That means they are fair game when revenues need to be raised without violating no-new-taxes pledges.

Deducting health expenses will become more difficult in 2013

Real Estate Tax Talk

BY STEPHEN FISHMAN, FRIDAY, AUGUST 17, 2012 Inman News®

Coins and stethoscope image via Shutterstock.

Have you been thinking about going to the chiropractor or dentist, but been putting it off because it's not covered by insurance? If so, you should probably incur these and other uninsured health expenses before the end of the year. If you wait until 2013 or later, it will become much harder to deduct them from your income taxes.

For decades all taxpayers who itemize have been entitled to a tax deduction for medical and dental expenses for themselves, their spouses and their dependents. Eligible expenses include both health insurance premiums and out-of-pocket expenses not covered by insurance.

Unfortunately, there is a significant limitation on the deduction, which can make it useless for many taxpayers: You can deduct only the amount of your medical and dental expenses that are more than a specified percentage of your adjusted gross income (AGI). Your AGI is your total taxable income, minus deductions for retirement contributions and half of your self-employment taxes (if any), plus a few other items (as shown at the bottom of your Form 1040).

Headlines that get properties sold Tap into emotional benefits to sell even the toughest listing

BY BERNICE ROSS, MONDAY, AUGUST 6, 2012 Inman News®

Martin Haas / Shutterstock.com

You have just taken a terrific listing, but there's a major problem -- it has the steepest driveway you have ever seen. How would you go about marketing this terrific house with a horrific driveway? Rather than trying to downplay the driveway, the secret is to turn it into a positive that will attract buyers.

Julie Ryan, a leading real estate speaker from Australia, recently was a guest on our RealEstateCoachRadio show. Julie had some excellent suggestions on how to market difficult listings with creative headlines. Her most powerful example involved a property that had been on the market for 11.5 months. It was a great house with a fantastic view, but the steep driveway was a turnoff for most buyers.

If you were marketing this property, how would you have dealt with the driveway issue?

Agents normally downplay the negatives. But the most creative marketers can turn a negative into a positive.

Century 21 TV ads airing during Olympics Franchisor's 'Smarter, Bolder, Faster' campaign featured during Super Bowl

BY INMAN NEWS, MONDAY, JULY 30, 2012 Inman News®

U.S. soccer image via Shutterstock.

Real estate franchisor Century 21 Real Estate LLC is taking its "Smarter, Bolder, Faster" TV ad campaign to the 2012 Summer Olympics.

The Realogy Corp. subsidiarysays the TV commercials -- part of a high-profile campaignlaunched last year -- will air more than 100 times during NBC Sports Network and MSNBC broadcasts. The Olympics, held in London, kicked off Friday and run through Sunday, Aug. 12.

Century 21 ran a 30-second "Smarter, Bolder, Faster" spot in February during the third quarter of Super Bowl XLVI. The ad featured real estate mogul Donald Trump, NFL Hall of Famer Deion Sanders, and U.S. Olympic speed skater Apolo Ohno.

"Earlier this year we showcased the capabilities of our real estate professionals on the largest single-day sports event in the U.S. with our first-ever Super Bowl commercial," said Bev Thorne, Century 21's chief marketing officer, in a statement. "Now our commercials will air throughout the next two weeks during what we expect will be the most viewed games in television history."

3 tips for setting home's list price REThink Real Estate

BY TARA-NICHOLLE NELSON, THURSDAY, APRIL 19, 2012. Inman News®

House-with-price-tag image via Shutterstock

Q: How can I really determine what my property is worth? Here is the situation: An online estimate website says my property is worth $230,000, but my agent says it's worth only $200,000! I'm listed at $225,000, and my price is comparable to other comparable listings. I really get the feeling agents are lowballing sellers to get an easy listing and sale. What's your input on this? --Lee S.

A: The only way to know with 100 percent certainty what your home is currently worth is, bizarrely enough, to sell it! In real estate, we define the value of a home at any given time as the price that a willing, qualified buyer is willing to pay for it, something you can't know until you list and sell it. Without doing that, all you can do is estimate your home's value, and obtain professional estimates of it, based on what other buyers have recently paid for similar, nearby homes.

As you are well aware, because homes vary, these estimates can and almost invariably do vary widely -- they are essentially opinions, more or less qualified, and based more or less in fact. Additionally, most opinions of value will be expressed in a price range, rather than a particular number, because of the fuzzy nature of the whole exercise.

Agents: Are you an IRS audit target?

Real Estate Tax Talk

BY STEPHEN FISHMAN, FRIDAY, MARCH 30, 2012.

Inman News®

Every year, the Internal Revenue Service releases detailed statistics about who got audited the previous year.

The stats for 2011, covering 2010 returns — have recently come out and they paint an unpleasant picture for many real estate professionals — particularly the successful ones.

The percentage of business and nonbusiness returns that got audited in 2011 is shown in the following chart:

IRS Audit Rates (2010)

	Audit Rate
Sole proprietors
Income under $25,000	1.3%
$25,000 to $100,000	2.9%
$100,000 to $200,000	4.3%
$200,000 and more	3.8%
Partnerships	0.4%
S corporations	0.4%
C corporations
Assets under $250,000	0.9%
$250,000 to $1 million	1.6%
$1 million to $5 million	1.9%
$5 million to $10 million	2.6%
Nonbusiness Returns
Under $25,000	1.2%
$25,000 to $50,000	0.7%
$50,000 to $75,000	0.8%
$75,000 to $100,000	0.8%
$100,000 to $200,000	1.0%
$200,000 to $500,000	2.7%
$500,000 to $1 million	5.4%

This chart shows that in 2010, 4.3 percent of sole proprietors earning $100,000 to $200,000 were audited. Not even corporations with assets worth between $5 million and $10 million were audited as often.

Moreover, only 1 percent of taxpayers who did not file a Schedule C form, but earned $100,000 to $200,000, were audited. Thus, self-employed taxpayers were four times as likely to be audited as employees earning the same amount.

In fact, employees earning as much as $500,000 were less likely to be audited than self-employed taxpayers earning as little as $100,000.

These statistics undoubtedly reflect the IRS’s belief that sole proprietors habitually underreport their income, take deductions to which they are not entitled, or otherwise cheat on their taxes.

Employees have less opportunity to cheat because their income tax is withheld by their employers and income reported directly to the IRS by them.

Unfortunately, most real estate professionals fall into the high-audit category: They are self-employed businesspeople who file Schedule C. The lesson these numbers teach is that you need to take the IRS seriously.

This doesn’t mean that you shouldn’t take all the deductions you’re legally entitled to take, but you should understand the rules and be able to back up the deductions you do take with proper records.

If you’re really worried about getting audited, think about forming a business entity to operate your real estate business. This could be a pass-through entity, such as a limited liability company taxed as a partnership or an S corporation.

Such entities don’t pay taxes themselves, but do file returns with the IRS. Both have extremely low audit rates: only 0.4 percent of such entities were audited in 2011. Regular C corporations also have relatively low audit rates.

Real estate professionals optimistic about home values

From AOL Real Estate

BY INMAN NEWS, MONDAY, APRIL 2, 2012.

Editor's note: The following item is republished with permission of AOL Real Estate. See the original article: Home Value Survey Sees Sharp Rise in Realtor Optimism. By Teke Wiggan

With signs that a real estate recovery may be kicking into gear, a new survey shows a sharp increase in optimism among real estate professionals about the direction of home values.

A survey conducted by home valuation website HomeGain found that the number of real estate professionals who expect home values to increase has more than doubled over just one quarter. Thirty-seven percent of respondents surveyed so far in 2012 said they anticipate that home values will rise in the next six months, up from 15 percent in the fourth quarter of 2011.

"The trend has been staying the same or decreasing. And here it flipped for the first time," HomeGain General Manager Louis Cammarosano told AOL Real Estate.

He added that since HomeGain began administering the survey in the second quarter of 2009, the percentage of respondents who have expressed a bullish outlook on the market has never risen above 25 percent, and, for much of the time, has sputtered around 15 percent.

The spike in optimism about home values follows recent reports that corroborate the view that the housing market is stabilizing. Home sales are trending upward and homebuilders are reportedly more optimistic than they've been in many years. Home prices continue to fall, but a number of industry observers say that price direction isn't necessarily the most important bellwether of a recovery.

Budge Huskey, president and chief operating officer of Coldwell Banker Real Estate, says he sees confidence among real estate agents that he hasn't observed since the housing meltdown. "What is consistently being represented out there today is that there is a sense of optimism in the real estate business that has not been seen in the last five to six years," he told AOL Real Estate.

While cautioning that real estate agents "tend to always be optimists," Huskey stressed that "this time it's based on what we believe to be some clear trends."

Prominent among the hopeful signs, Huskey says, is the state of the housing inventory, which had fallen to 2.3 million homes, or approximately a six-month supply of for-sale homes, as of January. That's the lowest level of inventory since March 2005, according to the National Association of Realtors, which released the statistic.

Meanwhile, total home sales have risen by 13 percent in the last six months, according to Capital Economics. And while construction of new homes dropped marginally in February, they still were at the second-highest level since October 2008, the National Association of Homebuilders says.

A last sign, much ballyhooed by industry optimists, is the state of homebuilders' confidence: The National Association of Home Builders sentiment indexreached 28 in February and remained at that level in March. Not since 2007 have homebuilders expressed such confidence in the housing industry.

Despite sprouting green shoots in the market, home prices continue to slide, and even when they do eventually trend upward, many economists say, the increase will be gradual.

That fact has led some industry observers to call for a rethinking of what actually constitutes a housing recovery, and to avoid treating price movement as the all-important indicator of a recover.

Capital Economics, for instance, recently revealed that even though prices declined last year (around 4 percent according to various estimates) and mortgage rates are finally ticking up, the economic analysis firm still believes that the real estate market is making inroads.

But CoreLogic senior economist Sam Khater advises against buying too much into the hype. "I would be cautious about folks getting too optimistic," he says.

The 1.6 million homes that are in a state of foreclosure are about to hit the market at a faster pace in the wake of an agreement reached between the government and major mortgage servicers over acceptable foreclosure practices, Khater says. That'll drive down prices, he says, as banks begin to push through foreclosures that they previously halted during negotiations of the $25 billion settlement reached last month.

"There's going to be a really long tail to this," he cautions. Still, Khater says that rising sales and the fact that fewer homes are flowing into the "shadow inventory" -- homes in a state of foreclosure -- are positive signs for the real estate market.

Huskey says the next healthy housing era will be a more "traditional market" that will stand in stark contrast to what he calls the "steroid years," when prices rose at an unsustainable pace.

As CNNMoney recently put it, "If you're waiting for home prices to go up, then you're missing signs the troubled housing market has finally turned around."

Real estate professionals also stress that a housing recovery should not be judged from a bird's-eye view, since market conditions vary dramatically from state to state and city to city. In states walloped by the real estate market collapse, real estate agents are significantly more optimistic that home prices will rise in the next six months.

Eighty percent of Arizona real estate agents and homeowners, 75 percent of Nevada agents and homeowners and 51 percent of Florida agents and homeowners told HomeGain that they believe home values will rise in the next six months. The optimism in Florida dovetails with dramatic price gains recently reported by Realtor.com.

The online marketplace reports that out of the 10 metropolitan areas that saw the highest price increases in their database in February of 2012, seven were in Florida. Miami median home prices increased by 26.19 percent, the listing service says.

Meanwhile, in states that weathered the housing crisis relatively well, a much higher percentage of real estate agents and homeowners believe that prices will drop. In Connecticut, 60 percent of agents surveyed said that they thought prices would continue to fall.

10 U.S. real estate markets drawing international buyers

Inman News report features data trends, analysis, commentary on popular areas

BY INMAN NEWS, FRIDAY, MARCH 23, 2012.

Inman News®

Affluent international buyers, attracted by fire-sale prices, are snapping up real estate in some U.S. markets. In a report released today, Inman News identifies 10 markets where public records indicate foreign buyers make up the biggest share of overall buyers.

Most of the markets are located in sunny Florida, though areas in Nevada, Arizona, New York and Hawaii are also on the list. The report highlights the economic and personal factors that drive foreign buyers to buy; their preferred property types; top countries of origin; how they find the real estate professionals they work with; why the selected markets appeal to them; and relevant demographic and housing-related characteristics for the markets, including share of foreign-born population, distressed property footprint, home-price trends, and vacancy rates.

Among the findings in this report, researched and written by Inman News reporter Andrea V. Brambila:

• Population levels in the markets range from about 600,000 in Lakeland-Winter Haven, Fla., to nearly 5.6 million in Miami-Fort Lauderdale-Pompano Beach, Fla.
• Seven out of 10 markets had foreign-born populations above the national rate of 13.1 percent in 2010. The Miami metro had the highest share born abroad, at 39.2 percent.
• In six of the 10 markets, area inhabitants who were foreign-born and moved from abroad accounted for a higher-than-average share of overall inhabitants who reported moving in the previous year in 2010. New York County (Manhattan) had the highest share: 7.7 percent of the people who moved in that county were both foreign-born and hailing from abroad.
• In seven out of 10 markets, the median sales price for an existing, single-family home was lower than the national median of $163,500 in fourth-quarter 2011. In eight out of 10 markets, the median sales price for a condo was lower than the national median of $160,800 for that same quarter.
• Condo prices fell on an annual basis in the fourth quarter in seven out of 10 markets. All seven saw their prices decline by more than the national rate of -1.7 percent.
• Seven of the 10 markets had a higher share of distressed sales in fourth-quarter 2011 than the national rate of 23.7 percent. Eight of the 10 markets had higher foreclosure activity rates in fourth-quarter 2011 compared to the national rate.
• Nine of the 10 markets, except for Honolulu, had higher vacancy rates in 2010 than the national rate of 13.1 percent. Cape Coral-Fort Myers, Fla., had the highest rate, at 37 percent.