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This is an important election coming up. For those that are full time in real estate it is important to know and understand the issues.  It will mean the difference of is it smarter to own or rent?  Even though I am in real estate, I have to stop and think of the consequences of my actions.  For me that may come down to a client asking some advice, or deciding myself what is a good purchase or investment.  This topic is troublesome.  There are answers on the Internet that say they refute this but in actuality they do not.  They defer it, because Congress writes the bills not the president.  The president however can set a policy wish list or direction that he would like to proceed and Obama has.

For the past several years the capital gains of a home could be excluded if you met the requirements of primary residence, occupancy etc.  500K could be gained every 2 years tax free.  If Obama is elected, he has already said the gains will be taxed as ordinary income at 28%.  So the sale of a home with 500K in the future will be taxed and over 140K will be owed to the government.  The question arises at a home at any price is why bother owning a home or purchasing a home as an investment if you will be taxed on the gain? Most real estate agents do not understand the dynamics of the business they are in.  Taxation will kill our business and forever limit the chance to gain meaningful appreciation again until the tax laws would change sometime down the road again.  Why would you vote for someone that has already said he is going to tax the sale of a home?  He will return real estate to the stone ages with just this tax policy.

• Why invest if your already know your gains will be taxed at 28%?
• Why would you further risk your own money if there is no return after maintenance and taxes?

"When selling your primary residence, and live in it for 2 of the last 5 years - you can make up to $250,000 in profit if you're a single owner, or claim twice that if you're married, and not owe any capital gains taxes"

Obama's Economic Adviser - taxing the sale of a home.

I think the major pause in real estate right now is persons are afraid to commit right now until they know who will be elected, and what policies will dominate.  You can't blame buyer's for being nervous right now to invest!

They're back!  You thought this mess was just going to end with the banks, the insurance companies, Fannie Mae, Freddie Mac, Wall Street Brokerages, the 200 billion dollar bailout, the 850 Billion dollar bailout, the rebates...ad museum.  Now the automakers are knocking on the Federal Government's door asking for a bailout!  What the...%#*@?  When is it going to end?  When are the taxpayers going to be taken off the hook from bad business managers?  Who' next?  The Airlines?  The Casinos?  Luxury resorts?  Real estate companies?

It is amazing that nothing the government has done has done anything to help out the real estate slump!  Raising the conforming limits in FHA, tax incentives, credits...yet our tax money the government is putting into business that should have failed keeps growing through the roof.

Yet there is no indictments in Countrywide, or any other failed institution.  No congressman or senators have been reviewed by the FBI for ethics violations.  No one is investigating the government lack of oversight. No federal emplyess will be fired!  What gives?  How bad is it?  Why did congress not act sooner?  What was congress doing that this was not on the radar for years?  The timing seems odd that this was all held up to just before election day by a democratic congress!    I really think those that are in charge do not even have a clue which fire should be put out first!

They should fire Paulson!  He doesn't have a clue except to bailout the big boys!

What many persons do not realize when the espouse redistribution of wealth is that social welfare is a failed economic policy of the FDR, Stalin and Soviet Union Era.  It sounds good, but doesn't work.  I am going to give one recent example.  Recently we had a major run up in gasoline and oil prices.  The cost to purchase a gallon of gas more than doubled in one year.  When it approached the tipping point well over $4 dollars a gallon of gas.  Retail sales froze.  No one even came out to spend   Peopel totally reevaluated spending money.  No one went out to eat.  They are still not going out to eat and shop as they once did.  When you don't go out to shop or dine... and as a result food sales have fallen off het charts.  Restaurants all around Atlanta are closing and have no one inside.  Why?  Less disposable income is to blame!  When a person has less disposable income especially a wage earner they spend less. The economy contracts.  There are no tips for waiters or bus boys.

More income in the pocket of an earner spreads the wealth.  Private schools, cars, hair cuts, dining, vacations, and choices in life do not appear with out money.  You have to understand economics when money also is pulled from the economy.  It is a reverse multiplier.  It contracts spending.

So lets rethink tax policy!  Raise taxes or lower them?  Social welfare or free enterprise?  It's your choice!

Why do people just not grow up and deal with life and give everyone else a break?  Everyone wants a government bailout these days.  They can't!  Wall Street brokerages, banks, mom and pop, insurance companies, auto makers, and they all want it on your dollar!  Grow up!  It is not the responsibility of government to bailout out losers.  Grow up, and take responsibility for your own actions!

When we purchases our first home, my wife and I worked 7 days a week, all the overtime we could stand, never went out to eat, no movies to place down 20% and pay our closing costs.  We then carried a 15.5% mortgage, while we had sick kids, high medical bills and high inflation costs left over from the Jimmy Carter administration.  We did not get any help from the government. No food coupons, no restructuring of a 15.5% mortgage.  There were no rebate checks.  There were no refinance opportunities from Congress, no lower mortgage rates.  That forced us to live a simple and meager life.  No vacations, no new cars, no big color TV's etc.   It is accepted as a reality.

There was no bail out for loads of folks in the 1980's that lost their homes in droves around the country.  Banks failed by the thousands.  And again, no assistance from the government.  Why?  Because it is not the job of the government to help you everytime you stub your toe.

What bailed us out was changes in the tax law that lowered taxes.  Remember the 50% marriage penalty tax?  I do.  Under Carter a working husband and wife paid over 50% of their combined income in taxes.  You made 80K combines, 40K were taxes.  It was repealed by Republicans, and it allowed the economy to pull out of am economic tail spin.  People come out to buy when they have more money in their pockets. 

Higher taxes do not increase buying or purchasing.  It is called "REGRESSIVE!"  They are counter productive. They are a camoflagued term for "Welfare!"

Redistributing wealth is a slap in the face to everyone that worked their way up in life and achieved in America.

Think before you vote!  You may be voting yourself totally out of a job!

Are You Helping or Enabling?  Sometimes we need to step back outside our roles and ask ourselves this question.  It can apply to many people in life from agents - to buyers and sellers.  Under the law - licensed real estate professionals are permitted (by state law in which they are licensed) to act inan agent-client relationship or as a facilitator.  What about all those that you have no relationship?  They just all all day long looking to gather more free information.  You know the type.  The ones that you work wiht for several months..only to find they are not returning your calls any longer, or they tell you now they are an agent, or their mom is an agent and they will purchase with them.  Thank you very much (You Doormat!)

When a person calls in on a listing or someone else's listing via the Internet or an ad we need to qualify them before giving them too much information, meeting them and showing them several hundred homes. There is nothing new here. Buyers have been doing the same thing years ago from print ads.  The important thing is not to just give all your knowledge away for free.  Today with the Internet the same questions are asked.   "All I want is the address so I can drive by."  "I just want the address so I can Google it!"  I know this common sense approach really is a hard thing to do, but if you can't do it, you are only kidding yourself. 

Years ago the stakes were much higher for the information we provide.  If I were sending a relocation package to Paris or Tokyo I need to know is the person committed to working with me before I spend $100 on a relocation package.  So why would I not ask questions of the buyers now?  Are you afraid you'll starve to death in a snow drift?  Do you have this need to help others free?  How many buyers have you converted to work with you recently?  How many buyers walked away and never returned your calls?  How many buyers lied to you and told you they did not have an agent and after you showed them the home - told you they have an agent?  You are not alone.  Many in our business are depressed and they will not acknowledge that things have changed.  They keep trying old methods and are just not working.  The first step to recovery is admitting that there is a problem.  Another step is to move forward with a new plan of action.

Flawed Thinking:

• You are going to win over the buyer.
• You will convert them to your way of thinking.
• By giving free information they'll trust you and want to use you.
• I'll show them a few homes - and see if they will sign buyers agency.
• I'll give them the addresses so they can drive by.
• I will supply FSBO's with blank contracts.
• I will advertise FSBO's Free.
• If they love me...they will use me!

This blog is just to put you on notice!  Times are changing, and after the next election you'll know forever more the phrase "You can't go back home again!"  For those of use that lived conservatively, paid our taxes, saved, lived within our means, used credit sparingly, never took costly vacations, drove an old car, and only know that plasma TV exists you are now screwed!  You should have lived high on the hog!  Our next suit of clothes will be a burlap bag or a barrel with suspenders!

Now we will be taxed to bail out those that fulfilled their Carpe Diem romp with life.  We will have no choice in the matter. It is sort of like you will not have a choice in contributing to the rehabilitation of your next door neighbors drug and alcohol rehab after they were on a 5 year bender!  Even though this Democratic Congress has been very poor stewards of your money and not done anything right, they have already signed your name in blood on blank checks for the next 200 years.  They will raise taxes on all corporations that survive the coming crash in the economy, and ensure that the remaining ones will move over seas.  Congress will be redistributing their wealth and yours to those that never took a risk, never put in an 18 hour day, never worked three jobs, or saved a dollar.  Congress will ensure two classes in this country the super rich and the super poor.   Joe Biden talks about sharing the wealth, but gave less than $400 to charity a year?  Come on Joe, are things that bad?  Have you heard about tithing?  What are you going to give to charity in tough times?  Obama are you going to give back that lobbyist money you took from Fannie Mae and Freddie Mac?  What about Schumer Dodd and Hillary?  If the politicians are so concerned about the poor why do you steal from the people?  Especially since our tax dollars have guaranteed all these bailouts.  "GIVE OUR MONEY BACK NOW!"

Before we vote - think it through. The congress for the last few years is Democratic. In the Senate it is Democratic, the House of Representativesis Democratic.  The president does not make law.  Congress does.  Don't like the war?  The Democratic Congress can stop it at any time.  That is their power under the constitution.  The economy started to nosedive when?  When the Democrats took over! Guess who regulates the banks and Wall Street oversight?  Yep - A Democrtic Congress again! Know your facts!

Our rights as citizens allows us to have a say in the way our government is run.  This is a presidential election, and it is for a 4 year term.  Think through the issues, and vote.  Vote the individual in office.  Vote out the bums.  Vote in to office competent individuals.

For those of you that think this is a rant, it is!  I feel so much better now!

I am sure there are many persons around the world these days biting their nails over the economy.  They are worried about layoffs, dispossessory actions, bills they cannot pay, foreclosures, and not having a safety net in their life. For the last few years, the world has run on credit instead of cash.  Now credit is taking a sabbatical!  Many persons are making the mistake of looking toward the government for the answers, because they have no light at the end of the tunnel.  The problem is that most persons do not have a budget.  They wing it all the way to hell.  If a car looks great buy it!  There is no point in reading the terms.  It is impulse buying.  A wrong assumption is "If they let me drive it out of the showroom, I must be qualified to pay for it!"  If I can drive a Mercedes, why should I be seen in a used Ford Tarus?

Many ring up far greater debt, and use their home as an ATM and take money out for trips, vacations, autos and many items.  Most cannot even remember what they spent it on.  You can't do that.  What about personal resnsibility?  My parents told me "Save your money, don't buy something unless you have the money to pay for it.  You always have to have a rainy day fund in case of sickness, a job loss or some catastrophic event...!"  No where in the constitution of the United States is the government supposed to bail us out.  The government was never designed to pay for prescriptions, medicine, retirement, debts, monthly rent or rebates!  Personal accountability begins with the individual.  The problem with credit as many are now seeing, it can also be taken away.  Do you have the cash to survive if your access to credit was frozen?  Start today before it is too late!  Let's be real, the soulution begins wiht each one of us.

• Create a budget and stick to it! Food, transportation, bills, rent/mortgage, insurance etc...
• Review all your expenses and trim them.
• Do not eat out!  Do not eat out! Do not eat out! Brown bag it!
• Plan your meals and learn how to streatch your dollar!
• Save your money - if you do not have a saving account, start one.
• Create a 6 month emergency fund.
• Pay off your debts.
• Eliminate your unnecessary expenses - Cable TV, Gym, dining out, lattes etc...
• Review your monthly bills for areas to cut back on.
• Do not shop to feel better - curb impulse buying.  Shop for bargains.
• When purchasing buy only energy efficient items.  Items that will save you money.
• When shopping in a super market, stick to your list - do not wander the aisles.
• Return items to the store for a credit that you do not need.
• Plan your auto trips.
• Buy within your means to repay.
• When buying a home, save up your 20% down payment!
• Before buying a home add up all the expenses of owning a home - monthly utilities, maintinence, landscaping, heat, air conditioning, phone bills, water bills, Home owner fees.  Canyuou afford them?

Atlanta Home Prices Decline. The Price of the Average Atlanta Home Sold Falls 17.7%

To most persons reading this this is not good news.  Our most recent statistics were just released by our FMLS this week and it is interesting to see the trends that are taking place.  The price of the average sold single family detached home sold in the Atlanta area in September 2008 has fallen 17.7% since September 2007.  The average sale price for an Atlanta single family detached sold in September was $214,823.  If you pay attention to the years 2005-2007 there is very little fluctuation in price.  This year it is very different.  It is a very price sensitive market that is driven by a few buyers that are most selective in what they are buying.

Two Major Atlanta Real Estate Firms Merge - Jenny Pruitt & Harry Norman.  This is a major event for the Atlanta real estate market.  Harry Norman Realtors which is one of the oldest and most respected real estate firms in the Atlanta real estate market since the 1930's has just merged with Jenny Pruitt another well respected real estate firm in Atlanta for many years.  In recent years during the market upswing, each company was acquired by Birkshire Hathaway - a Warren Buffett company.  These two companies were run totally as separate operations until this week.  In the last year there have been some consolidations of office locations in the Atlanta area for some of the Harry Norman offices.  I am sure this is a consolidation of sorts also.  One would assume it is a measure based upon conserving resources by eliminating duplicities of management, accounting, IT, relocation etc.   I'm sure they will have a seamless integration of both companies.  This is reflective of the severity of the Atlanta and national real estate downturn.

In the not so distant past, we also lost some other major real estate players in the Atlanta real estate market landscape.  The news articles report that each company will retain its brand lable.  It wil be interesting to see how it all pans out.  Years ago we had a similar aquisition  of Northside Realty and Buckhead brokers.  They were absorbed into Coldwell Banker and then their names and identities quickly faded from our town.  I personally believe this is just the beginning of a long drawn out correction in the Atlanta and national real estate industry.