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Brokerage Commissions on the Rise

Commissions Reach Nine-Year Peak

Written by: Steve Cook   Sun, January 10, 2010

Market Activity, featured

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Home sellers getting ready to put their homes in a spring market stimulated by tax credits and lower interest rates should budget for some bad news when it comes to paying their real estate agency.
Real estate commissions have risen for four straight years and they are higher today than they have been since 2001.   The average commission in 2009 was 5.29 percent, up over six percent than last year but still below the mythical six percent customary in many markets.
Commissions fell with the onset of the housing boom at the turn of the decade as brokers made concessions to get listing and discount brokerages flourished to take advantage of the sellers’ marker.  With the collapse of housing markets in 2006, commissions began to rise again as it became more difficult for sellers to market their properties.
Higher commissions do not necessarily mean more money for brokerages, however. Price declines and greater activity at the lower end of the housing market as a result of the success of the first-time buyer credit last year combined to reduce income to brokerages despite a, increase it the  commission rate and increased sales volume.
Total commissions through November were $40.6 billion, according to calculations by Bloomberg News Service based on the average commission rates from Real Trends Inc. and on home price and sales data from the National Association of Realtors.
 The average national commission rate hasn’t seen six percent since 1992, when Real Trends pegged the average rate at 6.02 percent.  By 2005, the rate had fallen to 5.02 during the peak of the housing boom.

2010 Inheritance Laws...........Or lack of one!

Congress has not passed an extension of Inheritance Tax Laws yet for 2010 and your clients might want to know about it.........

Tax Law Alert   Current Status of Estate Taxes Due to the priorities of Congress last year, there are currently no federal estate or generation skipping transfer (GST) taxes. This situation could last for a few months or this entire year. Congress could even pass a law that is retroactively effective to extend the 2009 estate tax laws without a gap, which would likely be challenged. If Congress should fail to act for all of 2010, the existing law will reinstate an estate tax in 2011 with a federal tax rate of 55% and a $1 million exemption amount instead of the $3.5 million exemption available in 2009. A separate Colorado estate tax could also return in 2011. While this repeal could result in estate tax savings for people dying this year, the disposition of your estate could be changed from what was originally intended. Many tax planning documents refer to the old "unified credit" or "applicable exclusion amount" which only existed with an estate tax. Without the estate tax, the funding of bequests or testamentary trusts based upon such amounts would likely be altered. The lack of a GST tax also denies any GST exemption allocations. These changes could especially affect the amounts passing to surviving spouses and gifts to grandchildren, directly or through trusts. Further, beneficiaries could incur additional capital gains taxes upon estate asset disposition. This results from a change in computing basis on inherited assets from date of death value under prior law to a carryover of the decedent's tax basis under the estate tax repeal. Identification of low basis assets and specific allocation among beneficiaries may be needed to minimize the effect of this. If you have any concerns about the possible effect upon your current estate and lifetime gifting plans, please contact us for a review of your existing estate planning, trust and business succession documents. We can then explain the effect of the current law and, if desired, prepare amendments to compensate for the changing estate tax laws. Unfortunately, we just don't know when Congress will act or what they will do. We want our clients to be confident that we are on top of the situation and stand ready to assist you now and as additional changes occur. Constance D. Smith practices in tax planning for estate disposition, lifetime wealth transfers, business succession, and probate administration. Her experience in multiple areas of law, personal finance, and small business administration aids Connie in drafting custom-designed wills, trusts, partnership agreements, and private foundation documents. Connie can be reached at 303-628-9557 or by email at csmith@rothgerber.com. Estate Planning and Administration at Rothgerber Johnson & Lyons LLP Circular 230 Disclosure: Pursuant to IRS Regulations, we must inform you that any federal tax information, advice or recommendations contained in this communication is intended for informational purposes only and cannot be used or relied upon to avoid IRS imposed penalties or to promote, market or advise any other person(s) of such information. January 8, 2010 Advertising Material   Read article online Author: Constance D. Smith Presented By: Denver One Tabor Center, Ste. 3000 1200 Seventeenth Street Denver, CO 80202-5855 303-623-9000 Colorado Springs 90 South Cascade Ave., Ste. 1100 Colorado Springs, CO 80903-1662 719-386-3000 Casper 123 West First Street, Ste. 200 Casper, WY 82601-2480 307-232-0222 ____________________________ This alert has been prepared by Rothgerber Johnson & Lyons LLP ("RJ&L") for general informational purposes only. These materials do not, and are not intended to, constitute legal advice. The information provided in this alert is not privileged and does not create an attorney-client relationship with RJ&L or any of the firm's lawyers. This alert is not an offer to represent you. You should not act, or refrain from acting, based upon any information in this presentation. The hiring of a lawyer is an important decision that should not be based solely on written information about qualifications or experiences. The Wyoming State Bar does not certify any lawyer as a specialist or expert. Anyone considering a lawyer should independently investigate the lawyer's credentials and ability, and not rely upon advertisements or self-proclaimed expertise. Constance D. Smith, Esq. is the lawyer responsible for the content of this material. She can be reached at 303-628-9557 or at csmith@rothgerber.com.   Read or print the entire article online   Manage your subscription   or remove/unsubscribe

Luxury Real Estate Prices Still Too High

Buyers are still going to look for the best buys in the best resort locations in the world.........

2010 prediction: Your prices are too high

Over the past few weeks the property media has been awash with predictions for 2010. Most of them will turn out to be wrong. More >

Foreclosures in the Denver Luxury Market

Best buying opportunity in the Denver luxury real estate market in years............

Foreclosures create some deals among luxury homes - By Margaret Jackson The Denver Post

Contact me if you are interested in how to get involved in that market!

Trulia Real Estate Predictions for 2010

How these predictions affect the Luxury Resort Markets I am not sure about, but they are interesting ..............

Trulia CEO offers predictions for 2010

by Margaret Jackson on December 23, 2009

As 2009 draws to a close, Pete Flint, chief executive of the real estate web site Trulia, offers the following predictions for the new year:
* We will continue to see lots of volatility in the housing market through 2010.
* Three major factors will contribute to the drop off in the second half of the year: Government intervention will disappear; shadow inventory will hit the market; and mortgage rates will rise.
* The tax credit has not created new demand, only pushed demand forward to the beginning of 2010.
* When the tax credit runs out, interest rates creep up and more inventory hits the market, we can expect prices to drop once again.
* Sales volume will be flat compared to 2009 (5 to 5.5 million homes).
* Prices will drop another 5 percent to 10 percent.
* Inventory levels will creep back up.
* Mortgage rates move back into the range of 6 percent.

NAR's 2010 Real Estate Market Predictions

Here is a good article from the National Association of Realtor's Magazine predictions about the national real estate market, interest rates, residential markets, commercial markets, vacancy rates, etc. I think you will enjoy this http://tinyurl.com/Real-Estate-2010.