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Old 08-15-2012, 06:17 AM
 
Location: DFW - Coppell / Las Colinas
29,956 posts, read 34,568,659 times
Reputation: 35960

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Quote:
Originally Posted by RE Skeptic View Post
I dont think anything on the HUD is taxable. If a seller gives the buyer a 5K concession at closing, are you saying that this is taxable?
All commissions are on the HUD and they are taxable. I get a 1099 from my Broker for that money. It all depends on how it's handled.

If you are paid money, I would send you a 1099, report it to the IRS. That protects me and you can then argue with the IRS whether it's income or not.
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Old 08-15-2012, 07:56 AM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 12,680,955 times
Reputation: 3809
Quote:
Originally Posted by RE Skeptic View Post
I dont think anything on the HUD is taxable. If a seller gives the buyer a 5K concession at closing, are you saying that this is taxable?

As I understand it, the only potential taxable income is money paid directly (off the HUD). This can occur if the rebate to the buyer exceeds the buyer's closing costs. Some of you may have heard of Redfin, a discount broker on the West Coast.

IRS Rules That Redfin Does Not Have to Report Commission Refunds as Taxable Income | Redfin
Here's a paragraph from that Redfin article:

"... Because an individual or corporation can only petition the IRS on its own behalf, Redfin could only seek a ruling to clarify its own reporting obligation, not to address the individual circumstance of each customer's tax return. The ruling does however state that "a payment or credit at closing from [Redfin] represents an adjustment to the purchase price of the home and generally is not includible in a purchaser's gross income..."

That ruling was in 2007, and things may have changed. Before not reporting it as income, I would seek the advice of my tax accountant.

Quote:
by RE Skeptic-----That being said, refunds from agents can complicate tax planing and thus the advantage of having the seller reduce their price (assuming the LA is willing to re-negotiate).
Well of course, we wouldn't want to complicate tax planning for an unrepresented buyer who has induced the seller to interfere with our third party contract.

Any money that is a part of the transaction goes on the HUD-1, unless it is stated on the HUD-1 that this is being handled "off the HUD".
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Old 08-15-2012, 08:00 AM
 
413 posts, read 699,126 times
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I have bought a house with a realtor rebate. Rebate should go on the HUD1. IRS has already issued an opinion that this is a price reduction and not income.

Title company will just reduce amount owed at closing. Realtor will never touch the money and never actually pay you. Therefore there should be no need for 1099. You can only issue 1099 when actually paying somebody. If there is a 10K commission and realtor gives you half, title company will distribute 5K to you and 5K to realtor. Realtor will only show 5K income received so no need to deduct.

Well this is how its supposed to work. Some realtors will not put it on HUD1 and then may issue 1099. Your lender will probably have restriction as to max contribution. My lender added my realtor contribution to my seller contribution and capped combination at 3%. Had I put down more the cap would have been 6%.
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Old 08-15-2012, 01:24 PM
 
Location: Needham, MA
6,324 posts, read 9,039,168 times
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Quote:
Originally Posted by hindukid View Post
I have bought a house with a realtor rebate. Rebate should go on the HUD1. IRS has already issued an opinion that this is a price reduction and not income.

Title company will just reduce amount owed at closing. Realtor will never touch the money and never actually pay you. Therefore there should be no need for 1099. You can only issue 1099 when actually paying somebody. If there is a 10K commission and realtor gives you half, title company will distribute 5K to you and 5K to realtor. Realtor will only show 5K income received so no need to deduct.

Well this is how its supposed to work. Some realtors will not put it on HUD1 and then may issue 1099. Your lender will probably have restriction as to max contribution. My lender added my realtor contribution to my seller contribution and capped combination at 3%. Had I put down more the cap would have been 6%.
Are you an accountant?
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Old 08-15-2012, 04:13 PM
 
413 posts, read 699,126 times
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Quote:
Originally Posted by MikePRU View Post
Are you an accountant?
No but I did stay at a Holiday Inn Express lat night. I do know how to read a HUD1 and that's how it worked with me. I have read the IRS opinion on the matter. My agent had to submit a letter to title company telling them to allocate X dollars to me. He told me he needed to do it this way so that it won't show as his income.
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Old 08-15-2012, 06:41 PM
 
Location: Columbia, SC
8,855 posts, read 17,455,857 times
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Mark...not to sound silly here but when you say "It's the agent's job to sell the house." I'd be curious to know what services and compensation you consider to fall into that scope. It is a very broad/vague statement.
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Old 08-16-2012, 01:30 PM
 
1,724 posts, read 2,274,789 times
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Quote:
Originally Posted by Brandon Hoffman View Post
Mark...not to sound silly here but when you say "It's the agent's job to sell the house." I'd be curious to know what services and compensation you consider to fall into that scope. It is a very broad/vague statement.
In general I believe it is the listing agents job to:
1. Take or have taken good photographs of the property.
2. If taking their own photos I expect a listing agent to have a nice camera....a Canon rebel, or NIKON 60 or better. I expect the agent to have a multitude of lenses for that camera. A wide angle 35mm lens is necessary for a good listing photograph in tight spaces...a 15mm lens may be required when dealing with small homes...A good variable focus lens for outdoor photographs.
3. Do a CMA and tell me what other comps in the area have sold for and what your opinion of my property is.
4. List the home on the proper MLS for the area...in Houston its HAR, with a national MLS listing. HAR sells houses in Houston...its invaluable.
5. Answer emails and phone calls about the listing.
6. Show the listing to prospective buyers, even unrepresented ones. I am ok here if you want to require some pre-qualifications so you are not wasting your time. Im not ok with you passing the person off to someone else in your agency though.
7. Promptly pass feedback on viewings, comments, offers, etc to me after talking to buyers or their agents. Feedback can help correct something that you did not know was a problem...if the listing agent is disconnected from the showings entirely and does not inquire you may never know that something was a problem.
8. COMMUNICATE EFFECTIVELY AND TIMELY - if it takes you 4 hours during regular business hours to get back to me, something is wrong unless you have already told me that you will be unavailable. Your job is to be constantly available...many times time is the most important factor.
9. Look out for my interest above everything else, and NEVER to lie or exaggerate when talking to me.
10. Transmit information to buyers timely....I will give you the floor plans, survey, deed restrictions, property taxes, etc, etc, etc....it is your job to pass all of this information on to anyone who requests it. I don't expect you to show the property to anyone, but I do expect you to give the information requested to anyone.
11. I do expect you to advertise my listing to your broker friends as well...your supposed to be plugged in and know who is looking for what....I expect you to utilize those contacts on my behalf.

Things I dont expect;
I do not expect a sales agent to list the property in the newspaper, in a magazine, or in a local flyer
I do not expect a sales agent to fill out my contracts for me.
I do not expect virtual tours or videos of the property.
I dont expect open houses - I dont even like open houses.

There are lots of other things but these are the ones that come to me just offhand....Ill think of more I am sure. For me personally Communication is THE most important thing....real estate agents are in sales...sales people need to be effective communicators...if you cant be clear/concise/consistent/timely then you shouldn't be in sales.

What do you listing agents feel is the job description?
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Old 08-16-2012, 02:14 PM
 
Location: Living on the Coast in Oxnard CA
15,372 posts, read 25,601,247 times
Reputation: 19649
Quote:
Originally Posted by 1insider View Post
About just taking pictures and posting on the MLS, that is exactly what the majority of listing agents do. There are good ones that go the extra mile but the majority are lazy. I see way too many listings with bad photos, poor descriptions and/or no lockbox.
Let me add that the home we ended up buying back in December of 2010 was a home I didn't even want to look at because the pictures made the place look very differant than when we went to see it. They featured a shed in the back yard that was very large, we have since removed it from our yard. They took pictures of the trees, all small palm trees that did not show the trees in the best of light. The pictures did not do justice to what the home looked like. When our realtor kept telling me about it I kept saying that we didn't want to see it because of the pictures oh and the size of the lot. In our area the average lot size is 6,000 square feet (60 X 100) Listed on the information was a lot size of 4,800 square feet. No one ever metioned why or how this specific lot was smaller. No one checked to find out that our home is built on a single lot that is infact 60 X 100 but a portion of the lot is considered residential with the remainder commercial. Looking at a map we have a small line going from the street to the back fence that continues past the home behind us and into the home across the street. One side is considered commercial and the remainder residential. This is the kind of information that I did not know about. When we saw the home we fell in love with it.
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Old 08-16-2012, 02:22 PM
 
Location: Columbia, SC
8,855 posts, read 17,455,857 times
Reputation: 6225
Mark, I'm fine with your list for the most part. 6/11 are conflicting statements. Going back to #6 I'll make the buyer be prequalified prior to showing and I won't just run out and meet a stranger at the property. I'll make them come by the office so I can screen them. If all checks out I'll show. If they are a serious buyer they'll comply to a request to get a PQ and meet in the office first. If not serious then they won't. Our agreement actually stipulates we'll qualify the buyers but that is a vague statement. "Qualifying" the buyers could be as simple as the agent asking if they would be interested in buying the home or as detailed as making them get a pq letter.
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Old 08-16-2012, 02:27 PM
 
Location: NJ
17,579 posts, read 38,333,874 times
Reputation: 16099
Quote:
Originally Posted by marksmu View Post
6. Show the listing to prospective buyers, even unrepresented ones. I am ok here if you want to require some pre-qualifications so you are not wasting your time. Im not ok with you passing the person off to someone else in your agency though.
Wouldn't unrepresented buyers be the only ones your listing agent is showing the house to? I would expect if the buyer have an agent they would do the showing.
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