Is your buyer precluded from buying US Real Estate?

Check with the Office of Foreign Assets Control at the US Treasury before you help your client buy.

To use the Office's search features by person and country, click Resources on the page and find the feature that fits your need.

Remember, The Office of Foreign Assets Control administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals.

So, its important to check the Office's Resources frequently as sanctions change and you need to know what the rules are today when working in real estate brokerage.

Taxation of Foreign Investors in Real Estate

Today we are teaching our course, Foreign Buyers, in NYC. Our students will begin to understand the implications of alienage in terms of real estate. We will also discuss the different rules for passive investments v. active investments. Real estate can be held in both fashions and its imperative to understand whether a 30% flat tax will apply on Gross Revenues or if instead a graduated tax will apply to Net Revenues. To help our students understand this topic further, we recommend reading U.S. TAXATION 
OF FOREIGN NATIONALS.

DECISION: A Licensed Building on Public Land is Allowed Without State Approval

Licensing a building on parkland has been addressed by New York’s Court of Appeals last Thursday. If you ever have a commercial client who is interested in building a restaurant or food stand on public land, this is an important case to be familiar with.

In 2008, the New York City Department of Parks and Recreation renovated Union Square Park with the intention of building a restaurant on the pavilion in the northern part of the park. When Chef Driven Market, LLC was given a license to run a restaurant on the pavilion in 2012, the community rose in an uproar, claiming that such a restaurant does not have a purpose in the historic park and hence violates the “public trust doctrine.” The community groups exclaimed that a restaurant in the park itself was unnecessary since there were many restaurants to choose from in the nearby area. The pavilion could be used for better purposes, such as dance classes or debate sessions.

However, New York’s highest court has ruled in favor of the city’s Department of Parks and Recreation, disagreeing with the community groups that the restaurant is in violation of the public trust doctrine. The restaurant, with its reasonable prices, outdoor seating available to the public, and charity events, would add to the park’s appeal beauty, and safety and improve the community as a whole. The community groups may have a different opinion as to what the pavilion should be used for, but this does not mean that the restaurant itself is illegal.

It is also important to note that if the Department had leased, not licensed, the pavilion to Chef Driven Market, LLC, then the restaurant would certainly be unlawful without approval from the State. However, since Chef Driven Market, LLC holds a valid revocable license to run a restaurant with ample oversight from the Department of Parks and Recreations, there is no need to get the state’s approval at all. The difference between a license and a lease is that the license gives the Department ultimate control over the day-to-day activities of the restaurant, even the right to terminate the agreement at will. A lease, on the other hand, would give Chef Driven Market, LLC control over the restaurant and use of the property instead.

Brokers, keep in mind that a brokerage license is required for leases, but NOT for licenses, pursuant to RPL 4401(1). If you know anyone that would like to obtain a license to operate a building on parkland, he or she does not necessarily need the help of a licensed real estate broker to do so!

Continuing Education Q &A: NY Real Estate Salespersons that hold 2 licenses

Question: I hold two NY Real Estate Salespersons licenses with different expiration dates. Do I need 22.5 credits of continuing education for each license? If not, do I have to track my credits against both licenses or one, if so which one? Please help clarify...

Answer: Generally it is the first license issued which sets the cycle for continuing education. This isn't an exact science as sometimes agents let either license expire for periods of time. See below example for clarification:

 

• If an agent is renewing license B, but they completed education within two years immediately preceding renewing license A, then license A set the two year cycle for CE and no education would be required for renewal of license B. Of course, the licensee would continue to use license A as the term in which CE must be completed prior to renewal.

Why Should a Homeowner Hire YOU to Sell Their Home?

Part of my regular reading is a wonderful blog from a local real estate brokerage analytic company called Keeping Current Matters. While browsing the blog I found an infographic from a Park City Utah based real estate brokerage titled "Top 10 Reasons to Hire a Real Estate Agent". The list discusses the value a seller obtains by hiring a real estate agent instead of listing for sale by owner. The list is helpful in establishing the basic value of a real estate agent, but in my opinion it does not go far enough. Any real estate agent can convince a homeowner why hiring an agent is better than listing for sale by owner, but a superstar can convince a homeowner why hiring them is the only option.

As a real estate agent, it is crucial that you maintain a constant self awareness of the value you provide above and beyond any other real estate agent or brokerage. Create a list of things that you do better than any other real estate agent. Always work to expand that list and focus on building upon the strengths you already possess. If you are aware of the value you provide, it will naturally find its way into your representation. As your network and reputation grows, these value adds will stay attached to your name and brand.

This self awareness of what makes you indispensable and unique not only makes it easier for you to pitch your services to a potential client - it also helps you grow as a professional. Why should I hire you when it's time to sell my home?

Fannie Mae and Freddie Mac are Setting Records in Profits

Due to the housing bubble burst in 2008, the federal government took ownership of the mortgage giants, Fannie Mae and Freddie Mac, and bailed them out of financial ruin. Not only did this bailout cost $187.5 billion in taxpayer dollars, but it also took years for Fannie Mae and Freddie Mac to recover from their monumental losses and begin to profit again.

However, there is good news! Now that the mortgage giants are profitable again, they have more than repaid the government for their 2008 bailout by paying dividends to the U.S. Treasury of $192.5 billion. Fannie Mae alone broke records with its $84 billion profit in 2013, completely exceeding the government’s expectation of recovery.

Fannie Mae and Freddie Mac do not expect to make as huge a profit in 2014 as they did in 2013, but they are hopeful that they will remain profitable in the long run. The Obama Administration, however, still wants to overhaul the mortgage giants and take away their monopoly on the mortgage market. There is currently a bipartisan bill in the Senate called the Housing Finance Reform and Taxpayer Protection Act of 2013 that focuses on financial reform and will hopefully take center stage this year.

Brokers, keep in mind that the housing market may drastically change in the next 5 years as private lending replaces the government-sponsored enterprises. However, now that the mortgage giants are turning such huge profits, reform may experience some delays. It is difficult to enact reforms when times are good, even though another financial crisis always looms on the horizon.