During 2006 I have written a number of articles known as the “Everything A Real Estate Agent Doesn’t Want You To Know” series which has been a consumer oriented series of information to help home buyers and sellers protect themselves when conducting a real estate transaction. These articles are a natural extension of books I have written known as “Everything A Real Estate Agent Doesn’t Want A Home Buyer To Know” and “Everything A Real Estate Agent Doesn’t Want A Home Seller To Know”.The first book written during 1990 was called “Everything A Real Estate Agent Doesn’t Want You To Know” and it had a fair degree of national success, much more than I thought it would, when I introduced it to the media during 1991/92. We sold the book in every state in the U.S. including Alaska, Hawaii and as far as Pakistan and Japan. This was not a bad performance for a self-published under-funded author.I wrote this book because I was a licensed real estate agent in the state of Ohio and, more importantly, I was a residential mortgage banker for a few years and I saw many home buyers and sellers experience financial damage from dealing with inexperienced and unethical real estate agents. Many of the agents were either totally incompetent or so self interested that they would mislead buyers and sellers, anything to get them to sign a purchase offer or a listing contract. Many of these home buyers and sellers who were cut through the neck and didn’t even realize they were bleeding because they lacked knowledge and insight into how the real estate game is played.These books have always caused friction between real estate agents and myself because many agents resent the title of the books and the ill conceived premise that my position is that all agents are bad crooked people, which is false. In fact, whenever I did a media gig I always made it a point to clarify this is NOT a blanket indictment against real estate agents. There are good, honest, knowledgeable, full time real estate agents in the business who are highly professional. The problem is they are the minority and not the majority.The major problem with the real estate industry as a whole is the ease with which a person can get a real estate license. While the educational requirements vary from state to state, in most cases, anybody can get a license to sell real estate in about 90 days. This just doesn’t make sense to me. Consider that many agents are little old women who operate part-time, have no business or selling background, go to school for 30 or 90 days and are licensed to represent home sellers in property transactions from around $50,000.00 and up. I mean, a lawyer has to go to school for seven years to get a license to write a fifty-dollar will or represent somebody in a petty traffic accident. But silly-sally can go to school for 30 days and list a $250,000 house for sale? That does not compute in my mind. What kind of representation will a seller get from a part time agent with one toe in the tub? And the full-time pros know what I am talking about.I have had many close discussions with agents while I was in the business and the bottom line is that part timers are often the weakest link in getting a deal done, unavailable for showings, etc. The bottom line, part time agents give part time results whether you are a buyer, seller or a full time agent trying to make a living.And the truth is that most people, especially first time home buyers and sellers don’t know what is going on…not really. How you select an agent to sell a home, the nature of contract law and the negotiable elements of listing contracts, purchase contracts, etc. is way beyond most first time buyers and sellers. The result is that sellers sign stupid long-term listing contracts with the wrong agents and the wrong companies and buyers pay way more for property then they would if they had more insight into the workings of real estate transactions involving commissioned real estate sales agents. I didn’t originate the problem, I just identified the problems and the solutions for home buyers and sellers.CAVEAT EMPTOR is legal jargon which means “buyer beware” and it means what it says. Whether you are a home seller or home buyer, you better know what you are doing when you are making decisions and signing contracts because, it is your duty to know and ignorance is no excuse under the law. If you do a stupid real estate deal, it’s your fault. Which is a shame because buying or selling a home is a BIG business decision. It is a business transaction composed of people, emotions, contracts and cash and those are all the ingredients for legal and financial pain if you don’t know what you are doing, and most people don’t. And how are people supposed to get access to this information that will protect their legal and financial interests before they buy or sell a home anyway?THE POWER OF THE NAR OVER GOVERNMENT AND MEDIA What many people don’t know is the National Association of Realtors (NAR) is one of America’s largest special interest groups who have incredible lobbying power over our politicians to write real estate laws that benefit the real estate industry, not consumers. Thus, the caveat emptor clause… state and federal real estate laws are written in the interests of your local real estate company and not you.Something else people are not aware of is the tremendous advertising influence the NAR has over print and electronic media to manipulate the news you read, hear and see because of their advertising dollar power. There is an article written by Elizabeth Lesley of the Washington Journalism review called Demand Happy News And Often Get It and it exposes the corruption and manipulation of the news consumers count on to make decisions about buying or selling a home. I strongly urge everyone to read this article.Real estate is like the stock market in some ways. When you hear of a fad like “flipping” you are probably at the tail end of that gimmick bubble, kind of like the dot.com days… everybody jumped in because they thought it was hot and it was really the end of the dot.com bubble. A lot of people have gotten caught with their pants down on the flipping angle.Home foreclosures are up across the U.S. because real estate agents and the lenders who cater to them (the real estate industry has tremendous influence over the lending industry because the are the source of so many home loans) have qualified otherwise unqualified borrowers, by putting them in gimmick loans. In the mad dash to milk the market, people have been steered in to interest only loans, negative amortization loans or attractive teaser loans like low interest adjustable rate mortgage (ARM) and other stupid financing that is NOT in the best interest of the buyer. That’s why many of the foreclosures are happening. Naïve and gullible people were sold a bill of goods based on unrealistic property values. The market got hyped and the agents and lenders were right there to exploit buyers and sellers. Did some people make money? Sure. But many people have found themselves against the wall with too much “house”, too big a payment and a housing market that looks pretty bleak for a while…All it takes is one ripple in our fragile economy to turn the real estate market into a landslide. Here’s a news flash: The economy is on shaky ground. The economy has been kept strong by housing sales and corporate profits and both are an illusion. The real measure of the economy is durable goods, like automotive sales, which are in the tank causing massive restructuring and layoffs. People can’t afford to buy cars because they are scraping the enamel off their teeth trying to make house payments…So, whoever you are, and you read my real estate articles, keep in mind that the reason I have done what I have done, and will do what I do, is because I am on the side of the consumer. I am on the side of the person who wants to be a better, more informed consumer. I am on the side of the person who wants to save a few thousand on their real estate transaction by being smart and on a more level playing field with real estate agents.And you know what? By educating people and teaching them how to do deals more intelligently, how to weed out the part timer agents from the pros and save a few bucks in the process, I am actually helping the professional full time agents. The truth is that honest agents won’t have a problem with my position because it will get rid of the riff raff.Thanks for reading!Jim HartCopyright © 2006 James W. Hart, IV All Rights Reserved
Both IRAs have been permitted by the IRS for years, yet is seems that very few people know that they even exist. Quite simply, a self-directed IRA is one that allows an investor to hold non-traditional assets (like real estate, limited partnerships, general partnerships, private stock and more). This opens up a world of investment possibilities beyond the common stocks, bonds and mutual funds within most retirement plans.Real estate IRAs are a specific type of self-directed IRA that may only hold real estate. Some IRA custodians prefer to handle only real estate transactions and holdings and are an excellent option for those investors seeking to maintain some traditional holdings in their current retirement accounts and diversify in a separate account with real estate.Here are 10 reasons, regardless of the economic climate, that you should consider establishing a self-directed or real estate IRA today:
Most IRA custodians and employer-sponsored retirement plans limit your choices for investments. With a self-directed IRA, you can choose from a much wider array of investment possibilities from real estate to private stock and private notes.
Diversification is an important part of any balanced portfolio. Establishing a self-directed or real estate IRA allows you to diversify your portfolio in more ways than you ever thought possible.
For established or aspiring real estate investors, self-directed IRAs offer the opportunity to invest in an asset class they know and trust.
For those using a self-directed IRA to purchase real estate, you can use leverage in your IRA through non-recourse loans to acquire property (not possible in with IRAs that are not truly self-directed).
Self-directed IRAs can be established even when you already have an existing employer or IRA plan.
You can rollover a portion or all of assets from your current IRA plan into a self-directed IRA.
The ability to control your retirement in a way like never before through a self-directed IRA is very empowering to an investor. Finally, you have a choice of what you can invest in – seize the opportunity!
Contribution limits on an annual basis are the same for a self-directed or real estate IRA as they are for any other IRA.
You can establish a self-directed solo 401(k) plan, Roth IRA, Traditional IRA, Coverdell Savings account (Education IRA), corporate 401(k) or SEP IRA.
For those looking to learn more, visit InvestorLoft’s Self-Directed IRA Learning Center