Archive for the ‘Business’ Category

By Valerie Fitzgerald

Everyone’s got a story.  And when people hear mine, they become inspired.  America’s story is written by people who have reinvented themselves after encountering adversity and facing it head on.  I’m no different.

How I went from a chicken farm in South Dakota to a professional model in Manhattan, from an abused, single mother to a billion dollar agent to celebrities in Beverly Hills, has become a journey that encourages others.  I’ve reinvented my life many times, and I eventually carved out my best niche.

When people ask me what are the keys to my personal and professional success, I think to myself “trial and error and a lot of hard work.”  However, people want a concrete blueprint to follow, something tangible they can grasp and implement on their own.

To create a sustainable and rewarding life in both the personal and professional realms, I believe these three steps are paramount:

1.   Be Consistent - Have clear goals and work toward you goals everyday.  Let’s say you are working toward a successful career in real estate.  Everyday you need to do something to: further your education of the current market you work in; contact prospective clients; return calls and emails from existing clients; research finance options for impending sales; review marketing campaign and personal website…and that’s just the beginning.   There are 100’s of things you can do to further your productivity, and you need to do some of those 100’s of things each and every day, keeping your focus on the most important tasks that will lead you to your goals the fastest.

2.    Be Diligent – Be diligent about the things you do and things you say you are going to do.  You are only as good as your word. When you tell a client that you’ll research their question…research their question and get back to them quickly.  If you say you are going to call a client on a particular day…call that client on that particular day.  If you fail to keep your word, others will be inclined to take you less seriously – as a result…you’ll have less opportunities to keep you word.  Conversely, whatever you are doing…do it well.  Do your best.  Clients recognize haphazard or ‘lazy’ work.

3.   Be Serious – Yes, take your job seriously…have fun with it, and remember the reasons for why you’re doing what you’re doing.  Perhaps you want to make more money, contribute your time to charity or create more family customs and traditions – by reminding yourself of the “why?” you give your efforts meaning.

In my book, Heart and Sold: How to Survive and Build a Recession-Proof Business, I talk about the awakening of the self.  At first that feeling is fleeting and unfamiliar; but as you nurture it, you grow more powerful by the day.  Two events in my own life profoundly awoke my inner self — the end of my marriage and the birth of my daughter.  Both experiences created 180-degree shifts in my life and who I thought I was.  Like a diamond in the rough, thousands of pounds of pressure beat away at me until my new self could emerge shiny, beautiful and strong.

Until people started asking me to speak at conferences and events or I was appearing in Top 10 real estate lists nationwide, I really didn’t think about my success. People would say, “Wow, you are amazing!” But I really didn’t know what being amazing meant. I worked hard. I sold houses. I figured out my business. And I put a lot of effort into it.

Remember: success doesn’t happen overnight. The passion that it takes to reach your goals feels like a strong inner drive. There is something inside everyone that triggers that drive and makes people go above and beyond the status quo breaking through mediocrity. That’s what makes their visions come true.

Given the current economic crisis, many people are struggling financially and otherwise.  I overcame tremendous personal and financial adversities to create a life I desired most, and so can you.  I truly believe that desiring success is a very powerful step to take along the road to achieving it.  To live the new possibilities of your imagination is exciting.  The possibilities and choices are endless.

About Valerie Fitzgerald

Valerie Fitzgerald is the president of The Valerie Fitzgerald Group and specializes in luxury residential real estate in West Los Angeles in neighborhoods like Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu.  She is the author of Heart and Sold: How to Survive and Build a Recession-Proof Business (Simon and Schuster).  She has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles real estate community and her celebrity clientele.   She is on The Wall Street Journal’s “The Real Estate Top 200 list” and is one of Coldwell Banker’s Top 10 Agents nationwide.  She is the exclusive sales agent for Latitude 33, a new Marina del Rey luxury residential community.  Learn more http://thevaleriefitzgeraldgroup.com.

Reporting from Washington – With all the bad news about underwater homeowners and strategic walkaways, you might think that U.S. homeowners’ equity holdings are continuing to slide. But a little-publicized recent statistic on real estate is that home equity is again on the rise.

Is that some piece of rosy propaganda put out by housing lobbyists to stimulate more home buying? Not unless you consider Federal Reserve economists to be shills for the real estate industry. The Fed conducts massive ongoing research into mortgage balances and home-value changes in hundreds of local markets around the country, and reports its findings quarterly.

According to the Fed’s most recent “flow of funds” survey, homeowners’ net equity grew by nearly $1 trillion from the recession’s nadir in the first quarter of 2009 through the third quarter. From June 30 through Sept. 30, equity rose by $418 billion.

That’s not impressive compared with the quarterly increases registered during the hyperinflationary housing boom years, but it could signal something important: After three years of unprecedented shrinkage in home equity — and three years of rapid expansion in the number of underwater borrowers with negative equity — there are signs the down cycle may be shifting.

Last week, online real estate valuation researcher Zillow.com released its latest quarterly numbers on negative equity in major markets. The findings were sobering, but the study also offered some hints of improvement. The overall negative equity rate among U.S. homeowners remained flat in the fourth quarter at 21.4%. But like the Fed’s numbers, that represented a decrease from the first two quarters of last year, when 22% and 23% of owners owed more on their mortgages than the estimated market value of their real estate.

Zillow’s study found that in dozens of housing markets — including Washington, Los Angeles, San Francisco, Detroit, Miami, San Jose, Seattle and Tampa-St. Petersburg — the percentage of homeowners with negative equity appears to be on the decline.

Some of the largest declines occurred in cities hardest hit by the recession and the housing bust — Ann Arbor, Mich. (down 9 percentage points), Riverside (down 5.7 points) and Phoenix (down 2 points). Florida markets that have struggled with major devaluations also saw significant improvement in negative equity ratios in the fourth quarter.

On the other hand, Zillow’s study found historically high rates of negative equity continuing to prevail in key cities. In Las Vegas, for example, 81.3% of homeowners — 256,000 households — were still underwater on their mortgages in the fourth quarter. This number is down from 82.5% in early 2009, but that’s no consolation to the affected owners.

In Phoenix, 61.5% of borrowers were in negative territory — 2 points lower than in the previous quarter, yet still high.

Which major markets have the lowest underwater rates? As you might guess, they tend to be areas where the equity boom never quite boomed, and where toxic mortgages and fog-the-mirror underwriting by lenders were never the rage: Tulsa, Okla. (4.2%), Harrisburg, Pa. (5.7%), Binghamton, N.Y. (5.6%), and Peoria, Ill. (8%).

Negative equity rates are crucial barometers of local housing markets’ propensity to experience high rates of default, foreclosure and strategic walkaways. Communities with single-digit negative equity rates tend to have lower rates of walkaways and foreclosures.

The reverse is the case in areas where large numbers of underwater homeowners see no economic rationale for continuing to send in their monthly mortgage payments on properties worth tens or even hundreds of thousands of dollars less than the principal balance owed to the bank. They believe they are throwing away money on albatross real estate.

Mortgage market analyst Laurie Goodman, senior managing director of Amherst Securities, recently warned lenders to be especially vigilant about borrowers in markets where negative equity ratios are high. Once underwater borrowers miss just one payment on their mortgage, according to Goodman, there is a 75% to 80% probability that they will chuck the whole deal.

Borrowers with even minimal positive equity, on the other hand, are far less likely to do the same.

kenharney@earthlink.net.

Distributed by the Washington Post Writers Group.

Valerie Fitzgerald specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of the book published by Simon and Schuster Heart and Sold: How to Survive and Build a Recession-Proof Business. Buy it here.

Subscribe to this blog: Valerie Fitzgerald Group Blog

Follow Valerie on Twitter: http://twitter.com/ValreFitzgerald

Follow Valerie on Facebook:http://www.facebook.com/ValerieFitzgeraldRealEstate

Reporting from Washington – Thinking of cashing out some equity when you refinance your mortgage? Sure, that used to be what millions of homeowners did when they needed extra money.

But now get ready for the post-boom, post-crash trend: “cash-in” refis — the opposite of cash-outs.

“It almost sounds un-American,” quipped Frank Nothaft, chief economist for mortgage giant Freddie Mac. After all, Americans have grown accustomed over much of the last two decades to tapping into their equity — pulling out a chunk of cash and adding to their debt load — when they refinanced their mortgages. “Almost nobody thought of putting money back in.”

Cash-outs hit their highest level of popularity during the wild appreciation streaks in the early and middle years of the last decade. In mid-2006, just before home values began deflating across the country, the rate of cash-outs hit 88%, according to Freddie Mac, which monitors refinancings quarterly.

This meant that nearly 9 out of 10 refinancers whose loan files were sampled by Freddie Mac increased the size of their mortgage balance by at least 5% in the process. It was the heyday of the pile-on-more-debt mind-set — cash me out, I can’t lose on my real estate — that came crumbling down in 2007 and 2008, when home equity holdings shrank drastically and painfully.

From 2005 to the third quarter of 2009, according to Federal Reserve estimates, American homeowners lost $7 trillion in equity — an unprecedented evaporation of household wealth. Almost nobody was spared.

Now the pendulum in consumer psychology appears to be swinging toward reduction of household debt — whether on credit cards or mortgages.

In Freddie Mac’s latest quarterly survey of refinancings, 33% of homeowners put cash into the deal to lower their mortgage balances, the highest percentage ever. By contrast, only 27% of refinancers took cash out — the lowest percentage on record.

Why shift money from savings into your house? Nothaft says a small percentage of refinancers — including himself and his wife — traditionally have preferred to lower their mortgage balances whenever possible.

There are at least two key rationales for doing so, Nothaft says. No. 1: If interest rates are low and you’re getting minuscule returns on your bank savings or money market funds, paying down your home loan may well provide you a better return on your investment.

For example, in early 2009, Nothaft and his wife chose to lower their mortgage balance at the same time they were refinancing. “We thought, hey, this is a no-brainer,” Nothaft recalls. “We can get a 4 3/4 % return instead of close to zero” on checking accounts and bank deposits.

A second reason to consider a cash-in refi would be to qualify for a better interest rate and terms on the replacement mortgage.

Say you have a loan-to-value ratio above 80% and any refi of the current balance will require payment of private mortgage insurance premiums and possibly come with a higher rate.

But if you have some money that you could devote to lowering the principal balance — cashing in — you might be able to cut your LTV to 75% or less and get a more favorable interest rate and avoid mortgage insurance premiums.

Cash-ins, in effect, are a disciplined form of saving — one that in today’s depressed rates for competing types of savings might be an astute financial move.

Nothaft isn’t sure whether the recent jump in cash-in refis is the start of a long-term societal shift. But there has been a steady rise since the fourth quarter of 2007, when cash-ins hit 9%, up from just 5% of all refis earlier that year.

By early 2009, they accounted for 13% of refinancings, then grew to 18% in the third quarter. After that, cash-ins jumped to 33% in the final three months of 2009.

“It may well be a reaction to higher credit standards by lenders” — making cash-outs and refis in general tougher to get — or “some decision on the part of many people to be a little more conservative in uncertain times,” Nothaft said.

A cash-in refi is hardly an option for everyone. But with mortgage rates widely predicted to rise from 5% at present for a 30-year fixed-rate loan to the mid- to upper-5s as the year progresses, the numbers just might work for you if you have the resources.

Los Angeles Times

The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of the book published by Simon and Schuster Heart and Sold: How to Survive and Build a Recession-Proof Business. Buy it here.

Subscribe to this blog: Valerie Fitzgerald Group Blog

Follow me on Twitter: http://twitter.com/ValreFitzgerald

Follow me on Facebook:http://www.facebook.com/ValerieFitzgeraldRealEstate

Take a look at your systems, your schedules, your expenses, and your goals. Each of these areas could use a little ‘touch up’, so without getting overwhelmed, take a look at these suggestions and decide to make the positive change.

Systems – Systems are the foundation of which you work from. You can think of systems as the guide or rules for each particular area of your business. When your systems are effective and in place, you can spend more time generating business than crawling out from under piles of paper.

What happens when you go away on holiday? Do you come back to a huge ‘pile’ of things to do before you can even dive into your work load. When your systems are in place, you can effortlessly assimilate back into work mode and take off running.

How do you write and implement your ‘to do’ list? How do you monitor your contact with clients? How do you keep records and important data? How do you organize your office, including your computer? What simple changes can you make to get more organized and efficient?

Schedules – They say, if you have a task to complete – give it to a busy person. It seems there are those who can do 1,000 things each day, and there are those who can’t get 1 thing done. Usually the person who can’t get 1 thing accomplished has the most available time. Setting your schedule enables you to focus on what you need to get finished and weeds out ‘time wasters’. Set your weekly schedule on Sunday and allocate tasks to specific days.

Each night, review what you need to do the following day and get together anything you’ll need to complete those tasks. Of course, things get shifted throughout the week, but once the plan is in place, you can clearly see how to rearrange things to be sure everything gets finished.

Be sure to put an “end time to your day”. Set a time you leave the office, or if working from home – your “stop” time. You’ll find you’ll still complete your ‘to do’ list because you’ve set parameters on your time. It’s a trick I’ve played on myself for many years, and I find I am finished around the same time every day and I’m able to complete the things on my list.

Are you setting your schedule the night before, noting things that must get done and including things ‘if you have an extra minute’? Are you being reasonable with the time it takes to complete your tasks? Are you allocating time to ‘return calls’, ’send emails’, and other daily tasks. What are your “time-wasters”?

Expenses – It’s not just in today’s economy, this an important arena to pay attention to. Every little bit adds up. I tend to use this example often because many can relate to it. Let’s say you buy yourself a $3.00 latte each day before going into work. If you multiply that by each day, and each week, and each month – you are spending, on average, $600 a year.

Although, you need to make about $900 – before taxes -to ‘take home’ $600. That’s just for coffee! Ok, so you allow that, but what about all the other $3.00 expenses that add up the same way. No matter what the expense, every little bit adds up and you need to ‘get real’ with your budget.

Do you have a personal budget? Do you have a business budget? What unnecessary expenses can you cut? What changes can you make in how you run your business, in order to save on expenses?

Goals – I saved the best for last! It’s not too late to write your business goals for 2010. This is an important component in reaching success in your business. What do you want to accomplish this year? Do you want to increase your database by 500? Do you want to close (4) deals each month? Do you want to generate enough business to hire an assistant? or two? Do you want to extend your on-line marketing efforts? Do you want to make an additional $_____ (fill in the blank) each month? Regardless of your goals, write them down, visualize them, and take the necessary steps to make them h happen.

Have you written your goals for 2010? Can you see your goal list while sitting at your desk/laying in bed/driving in the car? What changes and action steps do you need to make to reach your goals?

It may seems like a lot to ask of yourself, but aren’t you worth it? I urge you to make the necessary changes that will enable your business to grow in 2010. Establish your systems, set your schedules, respect your budget, and reach your goals. Be the change you need in your world!

“Failing to plan, is planning to fail.”

~Anonymous

The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of Heart and Sold: How to Survive and Build a Recession-Proof Business. Buy it here.

Subscribe to this blog: Valerie Fitzgerald Group Blog

Follow me on Twitter: http://twitter.com/ValreFitzgerald

Follow me on Facebook: http://www.facebook.com/ValerieFitzgeraldRealEstate

“Tax reform is taking the taxes off things that have been taxed in the past and putting taxes on things that haven’t been taxed before.”

– Art Buchwald

Less than 3 months remain before your federal income tax return must be sent to the Internal Revenue Service.
Now is the time to start preparing so you can take all of the deductions and credits authorized by law.

True, you can file IRS Form 4868 and receive a six-month filing extension, but you still have to pay the full amount of the tax you owe for last year, which means you at least have to prepare a careful estimate of your liability.

A good first step in determining your tax obligation is to go to the IRS Web site, where you will find a host of publications to download. Perhaps the most comprehensive publication is No. 17, a 280-page booklet titled “Your Federal Income Tax for Use in Preparing 2009 returns.”

This column is the first in a series aimed at assisting homeowners in understanding basic tax rules and concepts.

First, a few definitions:

– Tax credits versus deductions. According to Julian Block, tax attorney and author of “The Home Seller’s Guide to Tax Savings,” most people do not understand the difference between the two. Credits, he writes, “lower a person’s taxes dollar for dollar, making them more valuable than deductions, which merely reduce the amount of income on which taxes are figured.”

Block provides this example: “A deduction of $1,000 saves $350 in taxes for someone in the highest bracket of 35 percent, but only $100 for someone in the lowest bracket of 10 percent A credit of $1,000 reduces taxes by that amount, whatever someone’s bracket is.”

Basis. This is the initial cost of the property, plus any improvements you have made over the years.– Gross profit. The difference between what you paid for your house and what you get when it sells. — Net profit. Gross profit minus the cost of improvements and real estate commissions. Also called “capital gain.”

Here are some of the key deductions and credits that apply to homeowners filing their 2009 tax returns. In many cases, there are income limitations. — First-time-buyer credit. If you bought a new home in 2009 or plan to do so before June 30, you may be able to take the first-time-home-buyer credit on your 2009 return.
– Energy-saving improvements. If you installed qualifying home improvements — such as windows and doors — in your principal residence, you may also be able to take a credit up of up to $1,500.

– Mortgage interest. Interest paid on mortgage loans on a first or second home is fully deductible, subject to the following limitations: acquisition loans up to $1 million and home-equity loans up to $100,000. If you are married but file separately, the limits are split in half.

The concept of an acquisition loan, also called “acquisition indebtedness,” is very important and has confused — and even trapped — many homeowners. In order to qualify for such a loan, you must buy, build or substantially improve your home. If you refinance for more than the outstanding indebtedness, the excess amount does not qualify as an acquisition loan unless you use all of the excess to improve your home.

However, at least part of the excess debt may qualify as a home-equity loan.

The IRS offers the following illustration about the deductibility of mortgage interest:
A taxpayer buys a principal residence for $1.5 million, putting $200,000 down and borrowing the difference of $1.3 million. According to the IRS, the first million is acquisition indebtedness, and up to $100,000 of any debt exceeding $1 million will qualify as home-equity debt. Accordingly, the taxpayer would be allowed to deduct the interest paid up to $1.1 million of the mortgage loan. Interest on the remaining debt is personal interest and is not deductible.

– Taxes. Property taxes can be deducted, but only in the year they are paid to the government. Thus, if last year you escrowed money with your lender for taxes to be paid in 2010, you cannot take a deduction for these taxes when you file your 2009 return.

However, if you bought a house last year, you may have reimbursed your seller for a portion of the prepaid taxes through the end of 2009. Review your settlement sheet (the HUD-1). Line 106 on Page 1 should reflect this tax adjustment. Because this was a current payment by you for real estate taxes, it is a deductible item. Indeed, when you receive your annual statement from your lender showing the amount of taxes paid last year (Form 1098), that amount may not be included because it was just an adjustment between buyer and seller and not a payment collected by the lender. Lenders are required to send these annual statements to borrowers by the end of January, reflecting interest and taxes paid for the previous year.

– Points. When you obtain a mortgage loan, you often have to pay one or more points. Whether referred to as “loan origination fees,” “premium charges” or “discounts,” they are still points and are considered deductible interest. Each point is 1 percent of the amount borrowed; if you obtain a loan of $220,000, each point will cost you $2,200. The new good-faith estimate and the revised HUD-1 that lenders are required to use will help you determine the cost of these items.

– Mortgage insurance premiums: If you paid such premiums last year, you may be able to deduct that cost. They would have been paid under a private mortgage company or for loans backed by the Department of Veterans Affairs (which calls them a “funding fee”) or the Federal Housing Administration. Discuss this with your tax advisers. There are income limitations that may preclude you from claiming these payments as deductions.

blkass@kmklawyers.com