I was in California over the weekend, and sat through several presentations from top agents in Silicon Valley as a favor to a friend considering putting his home on the market. It was interesting to see how they presented comps and market homes out there. Only one of the agents still uses print ads to market homes, another never places ads in the larger circ papers — “waste of money”, said he, preferring smaller hyper-local pubs, if any. For this crowd, it’s all about the web and emails/texts. 89% of buyers search for homes online, they said. But get this: among buyers aged 25 to 44, a whopping 95% use the internet to search for a home. Internet buyer’s incomes are 25% higher than traditional buyer’s incomes. More buyers find their homes on the internet than through signs, home builders, or print ads combined.
The internet is the only medium to grow in customer use since 2003.
Online marketing is also not limited by a geographic coverage base area, like local newspapers and magazines. This is important especially in dynamic, technology-based markets wanting to attract interest from not just around the country but around the globe. This is exactly what Robbie Briggs had in mind when he hooked up with Sotheby’s, why Ebby has Luxury Portfolio, and Allie Beth has Christies.
But I heard something else out there I really had not heard in Dallas: folks in Silicon Valley are very concerned about the effect of the new health care law currently being debated at SCOTUS, particularly the capital gains tax that will be used to fund Medicare. And they are making real estate decisions accordingly. To be clear, the capital gains tax is NOT a pure real estate tax as such, but a capital gains tax that will be paid on any revenue made on the sale of your home — “unearned income”. This from Investors.com:
There are tax hikes on medical device manufacturers, health insurance company CEOs, families of special needs children and (strangest of all) tanning salons. Yet the White House’s “compromise” health care outline released in February contains a damaging new tax hike on investors — a 2.9% surtax on “unearned income.” There is a high probability that this surtax will apply not only to interest and dividends, but also to capital gains.
The new Obama health care plan calls for an additional 3.8% tax on capital gains or “unearned income” for families making more than $250,000 annually (singles making more than $200,000). This will affect real estate transactions if you earn this much, and if you profit handsomely when selling your home, just as it will affect other “unearned income” gains like stocks, etc. (Of course, those can be manipulated more than real estate.) Let’s say your annual income is $325,000. You bought a home in Highland Park years ago for $300,000 and sell it for $850,000. Yippee. Your “unearned income” gain is $550,00, but the first $500,000 in capital gains profit is exempt. So your gain is $50,000 and added onto your income of $325,000 you will pay tax on $375,000 (salary plus gain). But there are other complicated stipulations which already give me a headache. The 3.8% tax will be leveled on either the amount by which the couple’s taxable income exceeds the $250,000 cap (in my example, $125,000) OR the capital gain on the home ($50,000). You get to choose the lesser, which is the $50,000 and 3.8% of that is $1900.
So, under those conditions, a $50,000 capital gain on the sale of your home makes you fork over an additional $1900. I guess wealthy folks in areas with these pricey homes who stand to make huge capital gains are worried and planning sales before this law takes effect, in 2013, like next year. Of course, if you stand to make less than $500,000 on the sale of your home, you will have nothing to worry about. Some agents think this will affect the market and cool luxury home sales.
I have heard very little of this talk in Dallas, have you?
— Daily Local Real Estate Dish By Dallas Real Estate Insider — Candy Evans at CandysDirt.com