Tuesday, March 26, 2013

NC TAX REFORM BILLS INTRODUCED!

Last week two tax reform bills were introduced in the Senate. Neither of these bills encompasses the entirety of the components that Senator Bob Rucho proposed in his comprehensive tax reform concept. As you may remember his proposal included a 1% statewide transfer tax on real property. No such tax is included in either of these bills, however each does pose separate challenges.

 On Tuesday, (SB 363) that dealt specifically with the “Franchise Tax” – mainly dealing with the scope and capping the tax to a certain percentage of asset. Specifically, it would repeal most state level and all local privilege taxes and replace the franchise tax with a simplified business privilege tax, which would apply to business entities with limited liability, including LLCs, LLPs and other such entities.  The bill has been referred to the Senate Committee on Finance. The proposed business privilege tax would apply to domestic and foreign corporations and all other business entities whose form of organization confers limited liability on one or more of its owners. Excluded from the tax would be single member LLCs whose single member is a corporation subject to the new tax and whose net worth and property are included in the corporation’s tax base. Investment companies such as RICs, REITs other than non-captive REITS, and venture capital companies would have special provisions which would limit the effect of the new tax.  Also excluded from the tax are business entities exempt from federal income tax, certain insurance companies and real estate mortgage investment conduits

The tax would be imposed at a rate of $1.35 per $1000 of the business entity’s net worth tax base, with a minimum tax of $500 and a maximum tax of $5000 on business entities other than corporations and a maximum tax of $75,000 on holding companies. Net worth is defined as the entity’s total assets less its total liabilities computed in accordance with GAAP at the end of the entities taxable year, subject to certain adjustments for depreciation and amortization and to add backs for affiliated indebtedness.

On Friday, the second bill (SB 394) was introduced and is much more comprehensive and does a number of things.
1.       Caps personal income tax rate is 6%...currently capped at 7.75%
2.       Caps corporate income tax rate is 6%...current rate at 6.9%
3.       Franchise tax rate is .001%;
4.       Franchise tax is expanded to all business formations except single member LLCs;
5.       Franchise tax is not capped for anyone other than Holding Companies (capped at $75,000);
6.       Reduces the sales tax to 4.5%. from 4.75%
7.       No expansion of services to “professional” services;
8.       Taxes charged on property care and maintenance services – think pest control, landscaping, power washing, security services, carpet cleaning, etc.;
9.       No additional transfer tax included; Those in place will stand
10.   Taxation of short-term rentals remains the same;
11.   Charitable deductions are turned into a credit and are limited to $600/year;
12.   Eliminates Privilege Taxes charged by cities and counties;
13.   MOST IMPORTANT:  This proposal appears to eliminate the Mortgage Interest deduction and Local Property Tax Deduction.

NCAR is holding meetings with their leadership, and the consultants to establish an appropriate response and determine the strategy of the Senate leadership. Political Note: the Prime Sponsor of this bill is a Charlotte Democrat, however, Senator Bob Rucho has signed onto the bill as a co-sponsor now, along with several others. Conventional wisdom would tell us that it is highly unlikely the Republicans (who campaigned on Tax Reform) will move a bill through their chamber that has a democratic Prime Sponsor. It is possible/probable that this bill might have been introduced to gauge opposition and a subsequent bill may come shortly afterward. Stay tuned folks, and watch your emails for Calls to Action if and when they are sent.

Thanks to Tara Lightner Robbins of RRAR for this information

 

Monday, March 18, 2013

Are You Creating Advocates In your Business?

There is nothing more important to the survival of your real estate business than having a consistent stream of high-quality referrals. Like a flowing river which is fed from many different streams, your business has to be fed in a similar way. One of the most effective and enjoyable methods in our industry is taking the time and devoting the energy to staying in touch with your database…giving them value and information to educate them on the excellent service you can provide…and remembering to ask for the referral!

Take the time to sort through your database to determine who the most likely sources of quality referrals are. To get the most out of your time, it’s important to prioritize everyone in your database…and then prioritize your time with each individual based on their ability to help you grow your business. Your database is not a list of names…It is a list of relationships!

The second step is to make the connection with each person and find meaningful ways to connect with them. Be sure to ask open-ended questions which allow them to share their story, and don’t forget to listen and remember…The next time you speak with them you can interject something “meaningful” into the conversation.

When you take the time to deepen your client relationships you make emotional deposits so the next time they hear someone speaking of buying or selling the will immediately think of you. This is when you know they are your advocates!

Suggestions for building advocates:

·        Spend more of your life trying to understand other people’s views than trying to sell them on your own

·        Practice active listening

·        Keep the conversation positive, don’t drift towards the negative

·        Consistently do more “small things”: It’s the small things in life which make the big differences!

Eddie Brown ©2013


 

Thursday, March 7, 2013

The Reasons Most REALTORS Struggle

You have heard the old phrase …”The definition of insanity is doing the same task over and over again expecting a different result”. The phrase has stood the test of time for a good reason…because it is exactly what a lot of people do…month after month, year after year! People want their lives to change, but they don’t want to change themselves…or more accurately…  they don’t want to endure the pain change can create.

A habit is like a friend…sometimes they can be bad for you, or sometimes they can be the best thing that ever happened to you. Successful REALTORS have one thing in common …Good Business Habits. Even though forming good sound business habits can be hard work, it pays dividends every time.

Along with good habits you also have to maintain a good attitude and keep your skill level in line with the market conditions which you work in. Below we have listed reasons why we feel some people struggle in real estate and how to cope with them.

·         The Real Estate “Roller Coaster” Ride:
In most real estate careers there is a rhythm of sorts… an ebb and flow of closings which makes predicting income nearly impossible…This ebb and flow can, and often does become a scary roller coaster ride for many. The “ride” is most often caused when an agent gets too busy and stops consistently looking for new business… this interruption of prospecting activity closes off the introduction of new prospects to your pipeline causing it to run dry creating a sudden reduction of income.

Think about this…what would happen if you forgot to brush your teeth for one day….not much other than offensive breath…what about two days, a week, a month, or a year? No doubt at a year there would be consequences…but not many people forget to brush their teeth because they have made it a habit....a GOOD habit! You must make prospecting for business a habit just like brushing your teeth or combing your hair.

·         Distracted by the small stuff:
It is Friday 11am and you have time blocked to look for new business when the phone rings and you see from caller ID it is an old fiend… so you answer and get into a long conversation regarding last nights hockey game…then decide to meet for lunch at the nearest taproom… (not entirely a bad thing because you can ask the friend who they know who is buying or selling!), The bad thing is that most likely you will blow off the prospecting time to have a few beers with your friend…(go back to the brushing teeth analogy in the last paragraph)…do you see where I am going with this? One missed day is OK…just don’t let it become a bad habit…Always make daily prospecting your priority!

·         Be the Starbucks not the corner gas station:
Everyone will agree that coffee is a commodity…and Starbucks probably pays less per pound for ground roast coffee than the local BP gas station does…but who charges more?...A LOT MORE!!!! The reason Starbucks can charge 4 times more for coffee than the BP station across the street is their differentiation. Millions of people make the conscious choice to pay more at Starbucks every day….Have you ever asked yourself why?

When a consumer meets with 2 agents to list their home…(both seem like nice capable people, but have just one difference…the commission they charge)…what does the consumer do? Unless you can quickly articulate the value you bring to the transaction over your competitor, you can’t expect the consumer to pay more. By adding value and sharing how you do business differently will show your competency and professional character....therefore adding validity to the commission you charge. 

You must be above average to succeed in real estate…your challenge is to be the best version of yourself this year!

·         Organization:
Most agents want to close more transactions… but some are too physically and emotionally disorganized to handle the added workload. Take little steps to get yourself more organized…just a 10% increase in organization can help ten-fold in other areas… 10% more prospecting may create 100% more income!

·         Unable to Manage Finances:
Because of the aforementioned roller coaster ride… it is sometime difficult to manage one’s finances…. We suggest you calculate what you need to live on every month and pay yourself a salary to cover that amount. The balance goes into a reserve fund for lean times, and then at the end of the year, you take a percentage of the reserves as your year-end “bonus”. Spend your business dollars wisely by not wasting money on the next “new thing” …study the market and know what works before you jump in financially.

If your 2012 wasn't productive...Will you continue to practice insanity and repeat history again in 2013? Or will you make positive changes in your life and rise to the top? It’s up to you.

Eddie Brown ©2013
www.ICU-Coaching.com