This is getting ridiculous

Seb FreySanta Cruz Real Estate

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It has been way too long since my last blog post, and I’m sorry. It seems I’ve developed something of a readership, and people have been asking me, “What’s up, no blog posts?” Well…


I was away in Las Vegas last week, as I mentioned in a blog post. I attended the CRS training. It was OK, but it some ways kind of bogus. I had visions of writing a big huge blog post about that. One thing about the National Association of Realtors (and the California Association, too) is that they are notorious for putting out rosy scenarios to the public.

It seems they are also good at putting out rosy scenarios in their training classes, as well. For example, we were doing an exercise on calculating the rate of return on an investment in a home purchase – you buy it for this, you sell it for that, and assuming a modest 3% yearly increase in value, at the end of 7 years, you have made yourself a mint.

Except, of course, they left a lot of figures out – like the cost of sale, repair and maintenance costs, the money you spent paying your mortgage above what it would have cost to rent it that whole time, etc. Putting that aside, though, they came up with their “profit” figure, and said, “but wait, that’s an after-tax number, if you had figured that as pre-tax income, really you would be looking at $X!” To figure out $X, they took the gain and added 28% to it, because that’s the tax that you would have paid on it were it income.

Small problem with that, of course. Investments held for 7 years are long-term capital gains, and presently, the long term capital gains tax rate is 15% (or less), not 28%. Basic. Obama, bless his soul, wants to raise the long term capital tax gain rate so we can soak the rich, so those assumptions might change if Obama becomes president (as I hope he does).

There are myriad advantages to owning a home, and myriad ways to improve it and add value to it before you sell. But I do take issue with misleading Realtors to that degree during a professional training seminar. It seems like a breach of fiduciary responsibility to parrot bad numbers like that to your clients.

I have lots more to say about a bunch of topics, but unfortunately, no time to say it! Taking a week off like that really killed me, I am extra swamped now playing catch-up, so I must run. I plan to get back into a regular blog posting rhythm pronto. Please stand by!

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