Gene Allen Fathom Realty Consultant for the Triangle Area: January 2017

Sunday, January 29, 2017

Allen's 3 PACK for Your Home Needs

I have always worked for a brokerage and started noticing some companies were actually a company working under another company. In fact my company, Fathom Realty, has a few themselves. I didn't think too much about it until I saw this article from NCAR. I have an LLC but have not really done anything with it yet but maybe I should start.

It would be kind of neat to sell homes with my own brand but then I would have to start the branding process all over. Something to think about.

Let me know how you use yours.

Do I need to be the BIC of an LLC set up to receive sales commissions?

Release Date: 10/11/2016

John Wait, Martin & Gifford, PLLC

QUESTION: My accountant recommended that I create a limited liability company (“LLC”) for the purpose of receiving my sales commissions. He said that I could save some money on taxes and save for retirement with a Simplified Employee Pension Plan. If I set up an LLC, do I need to be licensed by the NC Real Estate Commission? Do I need to designate myself as the broker-in-charge (“BIC”) of the LLC?

ANSWER: Under section A.0110 of the license law, your LLC will need to be licensed, but you do not need to designate a BIC as long as your LLC: “(1) has been organized for the sole purpose of receiving compensation for brokerage services furnished by its qualifying broker through another firm or broker; (2) is treated for tax purposes as a Subchapter S corporation by the United States Internal Revenue Service; (3) has no principal or branch office; and (4) has no licensed or unlicensed person associated with it other than its qualifying broker.” Under section A.0502(b), the qualifying broker of such an LLC (1) cannot be a provisional broker and (2) must be the manager of the limited liability company. The rules effectively prohibit a provisional broker from establishing a business entity to receive compensation.

Be sure to consult with both your accountant and your attorney to make sure that you are setting up your LLC, or other business entity, correctly. There are benefits to receiving your commissions through an LLC, but the risks may outweigh the benefits if you do not create and operate your company in compliance with the license and tax laws. For example, an LLC must be licensed before any commissions can be received by it.

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.

© Copyright 2016. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.

Wednesday, January 25, 2017

VA Aid and Attendance

I participate in Fathom Realties HomeTown Heros program which brings much needed monetary benefits to HomeTown Heros. Veterans are a big part of the HomeTown Heros program and I just found a benefit that I as a Veteran did not know about. This benefit has nothing to to with HomeTown Heros but I feel it is a way of passing information along that many Veterans and their families may not know about.

The program is called the VA Aid and Attendance Benefit. It is administered by the VA and will help with medical cost for a veterean that has served during a war time and the spouse even if the spouse is deceased. What a great benefit. I know because by wife is disabled and her monthly draw is $800 a month. Even though she is on Medicaid for now and Medicare in the future it does not pay for all of your medical costs and certaninly not if you have to go to an extended care facility.

Here is a link to share with Veterans and their families.

VA Aid and Attendance Benefit

Let us make sure our Veterans know we care by sharing.

Thursday, January 19, 2017

Reduced Commissions For In-House Sales

I live in Brightwood Trails in Durham, NC and work for Fathom Realty. Our company is growing like a field of weeds and with all that growth it becomes invitiable that our agents will bring buyers to my listings. The companies I have worked for in Virginia have always offered something in the way of in house bonus for sales between agents. Usually this was in the form of the company giving an 5% of commission or something like that. I don't ever remember reducing commissions to make a deal work and it sounds complicated. Here is what our state Realtor® Association has to say about it.

Can a listing firm reduce its commission to promote an "in-house" sale?

Release Date: 10/04/2016

Bill Gifford, Martin & Gifford, PLLC

QUESTION: I am the Broker-in-Charge at my firm. An agent at our firm has a listing and has received two offers, one of which was presented by a broker with our firm. Can our firm offer to reduce our commission if the property is sold to the buyer represented by our buyer agent? If so, do I need to disclose the commission reduction to the agent who is affiliated with a different firm?

ANSWER: There is no prohibition on your firm agreeing to reduce its commission at any time. However, on the issue of disclosure, the requirements of the REALTOR® Code of Ethics and the Real Estate License Law may be different. Specifically, while the Code of Ethics may not require disclosure of the commission reduction to other buyers, it appears that the Real Estate Commission might discipline a broker that agrees to reduce its commission on an in-house sale without timely disclosing that reduction to all competing buyers, and giving those buyers an opportunity to submit revised offers.

The Code of Ethics provision that touches on this issue is Standard of Practice ("SOP") 3-4. It states: "REALTORS® acting as listing brokers have an affirmative obligation to disclose the existence of dual or variable rate commission arrangements." A listing broker's agreement to reduce his or her commission if a listed property is sold to an "in-house" buyer would appear to create a "dual or variable rate commission arrangement". However, an attorney with the National Association of REALTORS® has advised us that SOP 3-4 does not bar a listing broker from renegotiating his or her commission at any time. NAR's attorney also opined that the Code of Ethics does not obligate a listing agent to put the acceptance of an offer produced by that agent's firm on hold until the listing agent informs all other MLS participants of his or her agreement with the seller.

The Real Estate Commission's legal staff has a different view. The Commission's overriding rule in the multiple offer context is that there must be a level playing field for all buyers. Listing brokers must treat all buyers fairly and honestly. In the opinion of one Commission attorney, these principles obligate a listing firm that agrees to reduce its commission on an in-house sale to inform all other buyers of this agreement, and give them an opportunity to present a revised offer.

Ultimately, it would be up to an ethics hearing panel, or the Real Estate Commission itself, to decide each particular case based on the facts presented. However, brokers who elect to reduce their commission without informing the agents for other buyers should do so with knowledge that there are risks involved.

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Monday, January 9, 2017

Can I sell my own listing in Brightwood Trails?

This is an article from NCAR. It could be useful for when I list a home in my area of Brightwood Trails because homes sell fast here. I think I would want to invest as homes are increasing in value quickly.

Can a broker make an offer on her own listing?

Release Date: 09/27/2016

Will Martin, Martin & Gifford, PLLC

QUESTION: One of my brokers has a listing that she personally wants to make an offer on. She has also received an inquiry from an individual with no representation and it's likely he will want to make an offer too. Please let me know how we should handle this situation so we don't get in trouble.

ANSWER: First of all, Real Estate Commission Rule 58A.0104(p) applies to this situation. According to the Rule, your agent cannot enter into a contract to purchase her seller’s property unless she does the following: (i) discloses in writing to the seller that she has a conflict of interest and that the seller may want to seek independent counsel of an attorney or another licensed broker, and (ii) the listing agreement is terminated or transferred to another broker affiliated with your firm. She should also tell the seller about the inquiry that’s been made about the property if she hasn’t done so already.

Regardless whether the listing is terminated or transferred to another agent, we would advise against your agent working with the individual who has made inquiry about the property, given your agent’s interest in making an offer on the property herself. If the listing is transferred to another agent with your firm, the individual who made inquiry should be advised to communicate directly with the agent to whom the listing has been transferred, and the new agent handling the listing should of course not disclose the terms of any offer that the individual may make to the former listing agent since she would be considered a competing party. See Commission Rule 58A.0115.

Saturday, January 7, 2017

Durham County Tax Assessments and Pictures

I live in the Brightwood Trails area of Durham County. Recently I have seen a tan Ford vehicle with Minnesota plates and a sign that says it is part of the county imaging project. I did some checking and the vehicle is a part a mandate from the state that requires counties to to consider the potential impact of physcal changes to properties on their tax values. I am not sure how many images he takes but for one vehicle to do the entire county could take a while.

The physical changes to a property often require a permit but oftentimes not. Even non permitted changes are supposed to be reported. Even after reporting property owners are responsible for ensuring the information is accurate. They can do this by visiting

www.dconc.gov/taxhelp and entering the properties parcel number. If the physical change affects the value of the property the property is mailed a notice of the value change. I wonder how often a physical change results in a negative value. I have seen some pretty awful remodels and sunrooms.

If you don't like your tax value or feel it is wrong you can appeal it with the Board of Equalization and Review prior to April 14. Lots of luck with that.

You will probably see a lot of activity from the appraisers also as the next reappraisal is in 2019. Field appraisers can take measurements of the outside of your house but not go inside so beaware of that. If you have questions you can call The Durham Couty Tax Administrator's Office at 919-560-0300 or email

tax-reveal@dconc.gov