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EFFECTIVE Real Estate Negotiation
08/03/2012 02:20 PM

 

negotiatingEFFECTIVE NEGOTIATION

 

General Words of Wisdom

  • Negotiation is not a contest. A better deal can be found for both parties.
  • Never fear to negotiate, no matter how great the differences may be.
  • Stay rationally focused on the issue being negotiated.
  • Quick negotiations are bad. Deadlines put timelines on ourselves that can have a negative effect on the negotiation.

Preparation - Personal

  • Exhaustive preparation is more important than aggressive argument.
  • Write down your plan. The better you plan the better the results you will get.
  • No plan is complete without considering how you will defend yourself against arguments.
  • Think through your alternatives. The more options you feel you have, the better a negotiating position you'll be in.
  • Learn as much as you can about the strategy and tactics of the negotiation.
  • Never decide an issue unless you are prepared for it.
  • Set your sights higher. Be prepared to take risks that go with higher targets. Be prepared also to work hard and be patient.

Preparation - Team

  • Never enter an important negotiation without inoculating your team.
  • Don't negotiate with a second-rate team.
  • Train your negotiators. There is a zone of not knowing in every negotiation.

Sources of Power

  • Competition
  • Legitimacy and a sense of "rightness"
  • Commitment
  • Knowledge
  • Risk-taking
  • Time
  • Effort of work
  • Money
  • Negotiating skills
  • Friendly associations

Interpersonal Relationships

  • Find common ground on a personal level.
  • A tough negotiation involves conflicts.
  • Don't be intimidated by status or authority. Be willing to confront after you do your homework.
  • People who have higher aspirations do better in the outcome.
  • The man or woman who has a strong need to be liked is apt to give away too much.
  • "Normal" people raise their expectations after success and lower them after failure.
  • You have more power than you think. Look for the limits of your opponent's power.
  • If, in a negotiation, you pushed the other party too far, have the grace and goodwill to renegotiate. At the very least be sure you listen to his/her problem and have empathy for it.

Success and Failure

  • Neither success nor failure is experienced if targets are too easy or too difficult to reach.
  • A great success leads to greatly raised aspirations. A great failure results in a severe drop.
  • Moderate success leads to a small rise in expectations. Moderate failure leads to a small fall or none at all.
  • People appear to have downside resistance to small failures. It often takes an extended series of small failures to drive expectations down.

The Opponent's Position

  • Determine what your opponent really wants.
  • Spend less time talking and more time listening and asking good questions.
  • Let the other side make the first offer. If you're underestimating yourself, you might make a needlessly weak opening move.
  • Listen without being critical. Sometimes silence is your best response.
  • Don't be intimidated by facts, averages, and statistics.
  • Test your opponents. You never know what he/she will concede (partly because he/she isn't sure themselves). Take your time and be persistent.
  • Negotiate in depth. The other person cannot say "yes" unless you help him/her earn a "yes" answer from his/her organization.

Deadlocks

  • Don't emphasize your problems if deadlock occurs. The other party has plenty of their own.
  • Don't be intimidated by a last-and-final offer, a firm price, or take-it-ot-leave-it. They are negotiable.
  • Introduce new information.
  • Change the negotiator.
  • Change levels within the organization.
  • Go off the record (go to a less formal atmosphere).
  • Caucus.
  • Learn to walk out and, later, return.

Offering Alternatives

  • Change the time-shape of the risk (share unknown losses or gains).
  • Change the time-shape of money (pay periods, down payments, etc.)
  • Offer minor concessions.
  • Present a "What if..." proposal.

Miscellaneous

  • Some gurus advocate a bit of play-acting. Always seem put off at your rival's offer. Play up the importance of factors you don't care about so it'll seem like a bigger deal when you concede on them. Seem more befuddled than you are so your opponent will underestimate you.
  • Remember that profit is a gain in satisfaction. Look at the hidden part of the iceberg for real satisfiers.

 

TACTICS

 

Take It or Leave It

  1. Test it by walking out.
  2. Continue talking as though you never heard it at all.
  3. Protest to higher management.
  4. Determine if there are some things you can do for yourself and thereby reduce the price.
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Real estate transactions can trigger an audit
08/03/2012 11:11 AM

 

Real estate transactions can trigger an audit

Tax time provides an opportunity to cash in many of the rewards of dabbling in last year's red-hot real estate market -- but there are numerous tax traps if you sold a home, refinanced your mortgage or bought an investment property in 2005. Although the rules are too twisted to explain fully, here's a brief primer of four common real estate transactions that could leave you vulnerable in an audit:

If you sold your home

Most sellers can cash in one of the biggest perks in the tax code. Couples can sell their home for a $500,000 profit without paying a cent of income tax. Single taxpayers can pocket $250,000. To qualify, the house must be your principal home for two of the past five years -- and even then there's flexibility because those periods don't have to be continuous and there are numerous hardship exceptions. If your gain is over the exclusion amount, hunt for expenses such as the cost of home improvements, real estate commissions and title insurance that can pad your "tax basis." Every $1,000 you track down will save nearly $250 in federal and state taxes. Tax trap: The rules changed dramatically in mid-1997. Until then, homeowners could defer tax on their gain by rolling it into the purchase of a more expensive house. If you traded up before the rules changed, you must count that deferred gain against your $250,000 to $500,000 exclusion. You can pluck the deferred gain from Form 2119, attached to your tax return for the year you sold the previous home. But it will be difficult to remember -- let along prove -- what costs you incurred in your current home if you don't save receipts and records. In that case, "go back down memory lane and look at old photos," said Daniel D. Morris, a tax partner with Morris + D'Angelo in San Jose. The goal is to find evidence of kitchen remodeling, landscaping and other improvements -- and hope you draw a forgiving auditor.

 

If you bought a home

One huge benefit of buying a home is that you generally can deduct the mountains of interest you pay. That probably means you'll graduate into the class of taxpayers who can save more by itemizing mortgage interest, property taxes, certain loan costs and a raft of miscellaneous expenses rather than settling for the standard deduction every taxpayer is entitled to grab. But there is a limit to what you can write off. You can deduct interest on up to $1 million of so-called acquisition debt and up to $100,000 of home equity debt -- caps that can seem snug considering the median-priced home in Santa Clara County sold for $689,000 in 2005, according to DataQuick Information Systems. Tax trap: That $1 million can also include a loan on a second home, but you can't deduct interest on what you borrow above that threshold.

 

If you used your home as a piggy bank

As interest rates crept higher last year, many homeowners refinanced their mortgages to lower their payments and siphon out cash. Others took out home-equity loans to tap the growing value of their real estate. Refinancing can unleash some tax savings. Some of your mortgage fees are deductible immediately, while the charge for "points" -- each point equals 1 percent of the loan -- must be deducted incrementally over the life of the loan. What if this wasn't the first time you refinanced? You can deduct the remaining points from the previous loan now. The points from the current loan still must be deducted over time.

Tax trap: Tax pros increasingly are warning that home-equity loans are ripe for audit because few homeowners understand when they can't deduct all the interest they pay. Sometimes, even interest on refinanced loans can be limited. "That's a minefield," said Lawrence K.Y. Pon, owner of Pon & Associates in Redwood City. Generally, you can borrow up to $100,000 of home equity and deduct the interest, regardless of whether you used the money to remodel your home, buy a Prius, pay college bills or take a vacation. But that can change depending upon whether you borrowed more than $100,000, how you spent the cash, whether you owe the alternative minimum tax and other factors. If you owe the AMT, for example, you usually can deduct the interest on up to $100,000 if you spent it to remodel your kitchen, but you get no write-off if you spent it on a car or other personal expenses. "It's an area of wide ignorance -- or people are ignoring it," said Sharon Kreider, a Sunnyvale CPA.

If you became a landlord

Investors scooped up rental properties amid the housing boom, looking to profit from appreciation, rental income and a raft of tax breaks. For example, it's possible to pocket thousands of dollars in rent tax-free and defer taxes years into the future and potentially pay lower tax rates. Tax trap: The rules of rental real estate are complex and often subject to dispute. It's highly recommended that you hire a pro to help you cut through the tangled rules of depreciation, passive activity income, capital gains and more. The confusion can begin when the first tenant hands over a check. The first and last month's rent are income, but the security deposit isn't because it might be refunded, Kreider says. The most obvious puzzle involves determining whether a bill can be written off immediately as a straightforward business expense or whether it must be depreciated over a number of years. This is an Alice-in-Wonderland portion of the tax code where landlords must depreciate an air conditioner in a window over seven years, while one on the roof takes 27.5 years.

"There are a thousand different issues," warned Rande Spiegelman, vice president of financial planning for the Schwab Center for Investment Research.

 

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Parrish Real Estate
07/11/2012 02:17 PM

 

Bradenton real estate covers the areas that are north of the Manatee River.

  Locals refer to the area as North of the River.  Palmetto, Ellenton and Parrish are becoming some of the most desired areas to purchase your new home. Ellenton is the home of the famous Outlet Mall.  There is a new library offering a coffee bar, meeting rooms, children and teen areas as well as computers for your use. Don’t miss the Florida Railroad Museum in Parrish.  Ride in a red Caboose, the dinning car or rent a caboose for your personal party Parrish has new construction communities as well as great resale’s for you to consider. Be sure to have a Braden real estate agent accompany you so you are sure to have your own representation during the sale. Come fall in love with North of the River and one of the agents at Bradenton real estate will help you find your new dream home.

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