Wisconsin 1-22-17

WISCONSIN EDITION

A POWERFUL MARKETING TOOL — DEFER TAXES WHEN SELLING A RESIDENCE 5 STEPS TO ACHIEVE LONGTERM SUCCESS AS A REAL ESTATE AGENT COVER STORY

ADAM REDMAN

FOUR CHALLENGES AND SOLUTIONS FROM THE FRONT LINES OF THE REAL ESTATE INDUSTRY PROPERTIES: THE GOOD, THE BAD, AND THE UGLY

WISCONSIN EDITION

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ADAM REDMAN

CONTENTS 4) PROPERTIES: THE GOOD, THE BAD, AND THE UGLY

20) 5 STEPS TO ACHIEVE LONG TERM SUCCESS AS A REAL ESTATE AGENT

14) A POWERFUL MARKETING TOOL — DEFER TAXES WHEN SELLING A RESIDENCE

22) FOUR CHALLENGES AND SOLUTIONS FROM THE FRONT LINES OF THE REAL ESTATE INDUSTRY

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Properties: The Good, The Bad, And The Ugly

by Denise Lones

I was shocked. There it was. An expensive property near a busy intersection that had stayed on the market for almost a year.

I asked one of my agents, “Why hasn’t this one sold?”

But none of these are reasons to put this property on the back shelf. In fact, there is a market for every market, no matter its location or condition. Too often, we make the mistake of shortchanging sellers who don’t have manicured lawns on cul-de-sacs with perfect houses. We prejudge our own listings to the detriment of the people we’re supposed to be serving.

He said, “Because it’s a dog. Look at it. Nobody wants those turrets that stick out like that. And besides, it’s at that intersection where there’s traffic all day long.”

I’ve been there. I’ve driven to properties hoping for a terraced I couldn’t believe what I was masterpiece with a stunning garden, hearing. This agent had “classified” and then felt that sick dropping this property in his own mind as feeling in the pit of my stomach something that wasn’t worth the when I finally saw it. trouble to market—pretending to service his customer while doing What do most agents do? They’re nothing. True, it wasn’t as beautiful polite, they take the listing, and they or pristine as surrounding neigh- get out of there fast. They rely too borhoods. True, it was in a not-so- much on their own opinion of the prime location. True, it could use property rather than pulling statistics to determine its true market value. some handyman work.

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OR they tell the seller, “This house isn’t going to sell unless you change the carpet, fix the paint, install new roofing, etc.”

Beware! This could lead into a legal nightmare. While on the surface this agent is giving generic advice, what if the seller does everything the agent suggests—and the house still doesn’t sell? That agent might want to call a good lawyer.

If a property needs work, that’s never a reason it won’t sell. There are investors, handypersons, contractors, and do-it-yourselfers who love these properties. Go to your local real estate investment club meeting and you’ll find people searching frantically for such properties. Advertise it as a “Handyman’s Special.” Target these people directly. You may be amazed how many of them are out there.

Here’s the truth: Every property— True, you may have to advise the good, bad, and ugly—will sell if seller they won’t get top-dollar if priced right. It is always about price. a lot of work needs to be done.

There is always someone in the But this is the true issue here—not market ready and willing to buy the work itself. It’s always about right now for the right price. price.

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Let’s talk ugly. A house is in pristine condition, but has a rather peculiar look. Well, I have news for you: Just because you think a house is ugly doesn’t mean there isn’t someone out there who will say, “This is the home I’ve been looking for all my life!”

cannot tell you how many times my jaw dropped when someone told me, “Perfect! We love it!” So, I’ve learned never to judge a house by its paint job, landscaping, or design.

You are not the world’s taste critic.

You cannot tell what people want. I

Copyright© 2014, Denise Lones. All rights reserved.

You have a job to do: sell the house at top-market price. You are hired to be the market expert. Sellers don’t Did you know there are people out have the time to do so themselves. there who prefer ugly houses? Yes, That’s why you have a career. ugly houses! Some people don’t care about the outside of a property. It’s always the market that They’re only interested in the determines what sells. No matter the inside, where they know they will shape, size, or condition. And you be spending most of their time. are not in charge of the market, These are people who don’t buy to which as always is based on supply impress others, but rather to please and demand. Whatever is in demand themselves. Thank goodness for will sell, whether it’s a beachfront these people. Without them, we’d mansion or a shack in the woods. Be have to tear down half the planet! creative. Use your marketing to target people who truly want these I’ve seen houses that look like properties. But most importantly, something from a Stephen King price the property correctly for the novel sell overnight while another market. that could be on the cover of Home and Garden languishes on the market Know thy market and thou shalt for weeks. Why? Because somebody know what sells—good, bad, or wanted that house. Period. ugly.

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ADAM REDMAN Top Agent Magazine

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Adam is the No. 1 agent in the Northwoods Association of Realtors since 2008. Annually he closes more than 500 sides, and has individually surpassed $40 million in volume in 2016, with the Redman Realty Group amassing over $115 million total.

ADAM REDMAN

Adam Redman got into real estate at an early age. After graduating from Indiana University, he started his career in 2004 as a licensed assistant with Century 21, and quickly found out that this business is what you make of it.

“The fun thing about real estate is the sky is the limit” he says. He went on to become a buyer specialist and then a full-time agent with RE/MAX in 2010. The following year, he and his wife Melissa opened their own brokerage, Redman Realty Group, LLC. Through hard work and innovative marketing, RRG now has three locations - in Minocqua, Manitowish Waters, and Rhinelander and 8Copyright Top Agent Magazine

recently moved into the rental market, with a separate office in downtown Minocqua. The brokerage currently has a total of 15 agents and 15 support employees, a fantastic team of professionals, who work together at this familyoriented company to get the job done!

Redman, along with his team, are natives of the Northwoods market they serve, which really allows them to give their clients an insider perspective on the region. “We all are full-time realtors who live, work, play, and were born and raised in the marketplace,” he says. “That has helped us all in knowing and Top Agent Magazine

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pr oo understanding the area and our customers.”

Redman’s clients come from all over the state, as well as from major cities such as Minneapolis, Minn., and Chicago, Ill. - the beautiful, rural Northwoods is a big attraction with its lake homes and large, unspoiled land parcels. This has helped Adam develop a 40 percent repeat and referral business, and become the No. 1 agent in the Northwoods Association of Realtors since 2008. Annually he closes more than 500 sides, and has individually surpassed $40 million in volume in 2016, with the Redman Realty Group amassing over $115 million total.

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The great success that Redman has achieved can be directly attributed to the way he and his staff treat their clients. “We understand the sale and purchase of real estate is a major life decision, so we work with our customers to make the experience as positive and stress-free as possible,” he says. “We definitely strive to put our customers first.

It’s always been evident and foremost in our business plan.” He goes above and beyond to assist his clients and finds great pleasure in helping them find their dream home. Every listing gets special treatment, supported by a first-rate marketing plan that includes Copyright Top Agent Magazine9

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pr oo all levels of promotion. From traditional print ads in newspapers and magazines, to a large online presence, he is able to generate interest with potential buyers outside of the immediate area, and get homes sold quickly.

He engages professional photography, drone images, single property websites, and was the first company in his marketplace to the use innovative, cutting-edge 3D Tour to showcase a home. “It’s been really helpful for a buyer to understand the layout of a property, or pre-qualify a residence for an out-of-state party” he says.

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As a lifelong local, Redman takes great pride in his involvement in the community. Getting involved at an early age, he has forged strong relationships with the community and provides financial support to more than 100 different local organizations. He sits on the board of the Greater Northwoods MLS Board of Directors, as well as on the board of The Tomahawk Lake Association, The Campanile Center for the Arts, The Lakeland Area Scholarship Fund, and The Minocqua Lions Club. “It not only helps you give back to the community, it gets you involved,” he says. “You get to meet so Top Agent Magazine

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pr oo many different people on a new level.” When not selling real estate, Redman and his wife and four children spend their time enjoying all the beauty and recreational fun the Northwoods has to offer - whether it’s on the water or in the snow. As Redman continues to grow his

business, he wants to get more young people involved in real estate and become a mentor to them. “I’d love to see them get into the business and do well,” he says. “I’d like to be a part of that, I know firsthand how fulfilling it is to help people find their dream property.”

For more information on Adam Redman, visit RedmanRealtyGroup.com, call 715-358-0450, or email Adam@RedmanRealtyGroup.com www.

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A Powerful Marketing Tool Defer Taxes When Selling A Residence

By David Fisher

Winston Churchill once said, “There is no such thing as a good tax.” Of course, he also said, “I like pigs. Dogs look up to us. Cats look down on us.

Pigs treat us as equals” so Winston was a pretty sharp guy. For purposes of this article, however I will focus more on taxes and less on pigs although there are probably more similarities than differences between the two. Pork is more than just the other white meat.

I don’t mind paying my fair share of taxes but I want my taxes to go to things like fixing infrastructure, educating poor kids or feeding the hungry.

However, it seems that much of our tax dollars go to pork projects to help members of Congress get reelected so that’s why I have become more focused over the years in my practice in helping my clients defer taxes when selling real estate and other highly appreciated assets.

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Most of us are familiar with what is called a 1031 exchange. A 1031 exchange is a great opportunity to defer capital gains taxes,state taxes and depreciation recapture when selling an investment property and by following IRC 1031, the seller can purchase another investment property of equal or greater value and defer the previous mentioned taxes to some point in the future. It’s a great opportunity for the seller and it’s a great opportunity for the real estate broker to buy additional property for their clients. It’s a win-win.

But what if the property being sold is a primary residence or a property that does not qualify for a 1031 exchange. We all know that a primary residence might be the largest investment that many will make and hopefully the primary residence will appreciate in value over the years. Even though there are various exemptions and exclusions for capital gains when selling a primary residence,it’s quite possible that there could be a sizable capital gains and state tax liability once the residence is sold. For example, I worked with someone recently who bought a home wisely and now, a couple of decades later, is selling the property and after crunching the numbers is facing a $4 million capital gain.

The property is in Texas so the seller is looking at a capital gains tax of $800,000 (4 million x 20%), no state income tax in Texas but add that in for the 43 states that have a state tax and also the CPA said that there might also be the alternative minimum tax as well but he wouldn’t be sure until crunching all of the numbers. If so, that’s additional income tax due. So if the property sold was in California, you can add about another $400,000 in state taxes. If the property was in Colorado, you could add an additional $200,000 in state taxes and so on.

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We all know that a primary residence might be the largest investment that many will make and hopefully the primary residence will appreciate in value over the years.

But take the taxes due to the next level. Let’s say that this individual paid $1 million in taxes, he is 60 years of age and will live for another 20 years. If he could defer that $1 million in taxes and invest that amount wisely, that could be $3 million or more that could be passed on to his heirs at his passing.

Remember that this is only the taxes deferred and not the rest of the sales proceeds. So the question is this... Can a property owner defer taxes when selling a high end residence or luxury property that does not qualify for IRC 1031. The answer is YES. It is absolutely possible. Having said that, there are a number of moving parts to accomplish this tax deferral strategy and the seller’s CPA and /or attorney would have to be involved but yes, it’s possible.

Imagine if you will the day you started selling real estate and you decided to work as hard as you could and put as much money away into your retirement plan as is possible. You would make whatever sacrifices needed in order to make as large a contribution to your retirement plan as allowed and when you had $3 million in your account, you were going to retire and do all the things that you choose not to do until you retired and had enough money to enjoy life.

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You opened your monthly statement and you couldn’t believe your eyes. There it was... $3 million in your account. You made it.

So you worked more hours than anyone in the office. You talked to potential clients that no one would talk to. You kept your car a couple of extra years before buying another one and you took shorter vacations rather than longer more expensive ones so you could make larger contributions into your retirement plan. Sound familiar? And this went on for 3 decades until one day, it happened!

You opened your monthly statement and you couldn’t believe your eyes.

There it was... $3 million in your account. You made it. You could now retire and do all the things you put off until now. You could not contain your excitement as you dialed your CPA with the great news. Your CPA was thrilled at your good fortune and mentioned to you that he had a tax form you needed to sign and then you could begin your well deserved retirement.

So he says to you...I need you to sign and date the form and then write a check made payable to the US Treasury for $900,000.00 and as soon as the check clears, you retirement can begin.

You feel like you were just hit by a truck. You try to speak but nothing is coming out of your mouth. Your CPA explains that a couple of years ago, Congress passed a tax law that said that before a taxpayer can retire, they must pay a 30% tax on the lump sum amount in their retirement plan. So you realize that you actually have $2.1 million in your account and probably need another 10 years of working to net the $3 million you want to retire. You’re devastated.

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“Have you considered the potential capital gains tax liability you will have when you sell.”

Well, there’s good news and there’s bad news. The good news is that there isn’t a 30% tax on retirement plans for now. I made that up. The bad news is that your sellers could be facing as much as that 30% tax on the capital gains they have earned when you sell their property. You don’t want to pay that tax so why would you let your clients pay that tax now that you know it might be able to be deferred indefinitely.

But imagine the powerful tool you now have in your briefcase. You’re talking to a prospect who is selling a high end property in LA, Aspen, Miami, New York, Chicago or any other location in the country and you want to list that great high end residence. The problem is that as good as you are, there are 3 other talented brokers that are also competing for the listing. Those 3 make outstanding listing presentations and the prospect is absolutely impressed with all of them.

Now it’s your turn to hit the ball out of the park and you make Babe Ruth proud. As you’re finishing, you ask the prospect one final question. “Have 18

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Again, this tax deferral strategy may not be for everyone but if it helps you make 1 sale a year, that’s a great opportunity for all involved. you considered the potential capital gains tax liability you will have when you sell.” The prospect responds that his CPA informed him that there will be a rather large tax bill to pay and he just has to take a deep breath and pay it. You then smile and ask him if he knew that he might be able to defer those taxes. He looks at you a bit stunned and asks you to explain and you do. Even if he decides to pay the tax, you have set yourself apart from the others and I can tell you that we have a number of success stories where the agent took the time to show concern for the prospect after the commission check would be paid and got the listing.

Again, this tax deferral strategy may not be for everyone but if it helps you make 1 sale a year, that’s a great opportunity for all involved. As I mentioned earlier, there are a number of moving parts to this strategy but a short phone conversation probably could give us insight to the viability of this strategy in a specific set of circumstances..

Now go sell a great property, defer the capital gains and state taxes and invite me to dinner. But please don’t serve pork. Churchill probably wouldn’t approve. Best wishes until the next time we visit.

Copyright©, 2015 David Fisher. All rights reserved.

David Fisher is the founding partner at Creative Real Estate Strategies. His firm specializes in helping brokers all over the country buy and sell real estate for their clients in a tax efficient manner. He can be reached at david@cresknowsrealestate.com. His cell is 713-702-6401 and there is more information at www.cresknowsrealestate.com Top Agent Magazine

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5 STEPS TO ACHIEVE LONGTERM SUCCESS

AS A REAL ESTATE AGENT Real Estate can have a reputation as an industry with a high turnover as far as agents go. Being a ‘people person’ with an entrepreneurial spirit is a great start, but what some fail to realize when starting out is that this is a business.

So if you’re in it for the long haul, you need to treat it that way. Here are some key steps you need to take to have your own successful real estate business.

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FIND A MENTOR

Once you get your license and hang your sign at a Brokerage, you’ll find that you’re pretty much on your own. That’s why it’s a good idea for new agents to find a large Brokerage that offers in-house training and mentorship or a boutique brokerage that has more seasoned agents who are eager to take a new agent under their wing. Being able to shadow a more experienced agent is invaluable and allows you to mirror what you’ve seen and run through the numerous scenarios that will arise when you are representing a client.

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CONTINUOUS TRAINING

This is a business that is constantly changing, so it’s smart to always stay ahead of the curve when it comes to new technological innovations and systems. There are even numerous online resources, where you can keep up on your trade, such as blogs by top producing agents that are a treasure trove of information. A confident agent with an in-depth knowledge of the business is one that easily earns the trust of their client, leading to repeat and referral business, which will be the bread and butter of your business.

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BUILD A STRONG ONLINE PRESENCE

Yes, referrals are the basis of your business, but building a strong online presence and marketing yourself to new clients is also important, especially before you’ve built up a strong referral base. Facebook, Snapchat, Instagram, and other social media tools are great way to get leads both for your listings and for yourself. It’s even a good idea to buy several domain names when you start, so that when you’re ready to build a website, you can ensure you have the names you want. Obviously the internet is also a great resource to find leads. Before you find a niche for yourself, it’s important to take advantage of every avenue there is. A lot of successful agents started off doing things no one else wanted to take on like foreclosures, expired listings or lower priced homes. But as you’ll find out, helping those who need it most is a great way to build a loyal client base, that will not only come back to you when they are ready to sell or buy again, but will be your biggest cheerleaders when it comes to referring you to friends and family.

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BUILD A SOLID FOUNDATION

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SET GOALS

One thing you’ll find in this business is that doing a lot of work up top, will lead to a more successful outcome down the road. That goes for marketing plans for your listings, as well as your business as a whole. It might not be the fun part, but it will allow you to one day focus on what you do best, dealing with your clients. Set up your CRM and the other systems you want to use from the get go. Getting these things established before you’re hopefully a busy agent is the best time to really learn them and decide what’s best for you.

Once you build a strong foundation and are establishing your client base, it’s important to continually set goals that help you implement your business strategy.

You can even invest in a real estate coach if you need someone to hold you accountable. It’s also important to constantly reevaluate what you’re doing. Set up a monthly audit, where you go over what is and what isn’t working. As we mentioned above, this is a fluid business and things are constantly changing, the same can be said of your business. What worked a year ago, might be losing you money as your business grows.

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Four Challenges and Solutions from the Front Lines of the Real Estate Industry

By Walter Sanford

There should be more profit-refining rather than adding a new layer of overhead or technology. Sometimes, the basics are not addressed when looking to increase the company’s or individual agent’s net returns.

1. Lack of training from top agents.

Many times, the agent who was average in production but great at the process becomes a training manager. There are broker/owners who just don’t have the time to train; there are the top producers in the office who don’t have the time or motivation to train; and then, there are the previously mentioned managers who took that job because it was as financially lucrative as production. Too many agents are not receiving superstar training in lead generation. I have coaching clients who receive training on process rather than lead generation at their offices.

There are many solutions, two of which are detailed below: A A brokerage system that brings the top agents into the training and recruiting business -- the two best known systems are Keller Williams and EXIT Realty. It is easy to reproduce these systems by giving better splits for listings sold or pieces of profit on new hires given to the introducer.

B Set up systems in the office that promote production like meetings where everyone puts their best buyer and best seller together; where the office performs certain lead generation systems until agents commit to them like expired solicitation; where top trainers are brought in and agents are held accountable to new ideas.

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2. Reliance on purchased leads.

Agents have lost their ability to prospect for sellers from hot demographics, because they buy leads from consolidators. If the purchased leads are good one year, they will go up in price or decrease in the number of leads in the next year. Agents need to prospect hot seller demographics blending “new school” with old school tools like direct mail, phone, follow-up, database, and closing abilities. The value you can offer certain seller demographics should be discussed at training meetings.

3. Offer macro-economic services.

An agent has the ability to offer great information on a local level. It is the only way to compete with national websites. Whether you develop neighborhood websites or a newsletter based on local statistics, honing your local value is the only way to beat national efforts.

4. Financially struggling agents who don’t understand budgeting, planning, and investing.

Many agents are struggling financially and they cannot devote their full attention to maximizing client satisfaction. They do whatever it takes to make the deal; they are in panic mode. With office services in place like setting up agent savings systems at close, training on tax-deferred investments, promoting real estate investing for groups, and budgeting analysis – offices have more agents who don’t live commission to commission. These agents are always better at making deals when the deals are based upon client satisfaction and not agent survival.

Before you attend another webinar from a trainer or a tech guy (who never sold real estate) as they try to make your job easier – take a step back and start firming up some of the basics.

Copyright©, 2016 Walter Sanford. All rights reserved.

Walter Sanford has been designing and implementing real estate systems for 30 years.

One of the most successful REALTORS® and now wealthy from his systems, Sanford teaches his systems and strategies through his products, seminars, and personal coaching producing the best results in the industry. Do what works, do what is proven. Hire Walter Sanford. Call our office at 800.792.5837, email walter@waltersanford.com, or chat with us online at www.waltersanford.com.

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