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Ticor Agent ONE- gets better

We made some major enhancements to TicorAgent recently and have created a video for your agents that covers all of the key items in under 2 minutes!

Numbers made easy.
Experience real estate’s #1 closing cost app, TicorAgent ONE.

A great app gets even better.

Buyer estimates.
Calculate the two numbers your buyers care about most: total monthly payment(PITI) and closing costs.

Would you like to Role Play? Have a one on one, or small group walk through on the tool?

Seller net sheets.
Regardless of price, neighborhood, or motivation, every seller wants to know the same thing: what will I net? Run a net sheet from anywhere in seconds.

Book Appointment today.

Also, we host classes weekly at Ticor Ontario on Wednesdays at 3 pm. Join Us

 

What even ARE Deferred Sales Trust and 1031 Exchange?

In this session of Meeting with the Masters we have Greg Burns of IPX1031, as well as Joel Harworth and Philip A. Board from 1 on 1 Financial here to discuss the ins and outs of 1031 Exchanges and Deferred Sales Trusts and how to use them to your advantage. If you prefer to listen to the recording of the episode, you can hear it HERE.  As always, you can listen to our podcasts on Itunes, Stitcher, or Spotify.

The Masters Team: Greg Burns, Philip A. Board, Ryan J. Orr, Joel Harworth, and Ron Romero

This discussion is going to be based upon the answers to the question what should you do with appreciated assets you want to cash in on?  The answers to this question are as follows:  Sell and pay the astronomical taxes on them, do a 1031 Exchange, do a Deferred Sales Trust, or just hold onto your assets.  We’ll be discussing everything about the middle two options because the others are self explanatory.

Click here to jump to Deferred Sales Trusts

Click here to jump to FAQ

Why Do a 1031 Exchange & What are the Limitations?:

  • 1031 tax code says that if you sell a property for investment or business use to exchange for another real estate property whose initial intent of purchase must be investment or business use, you can defer the tax.
  • Why is deferring the tax such a big deal?  The tax on a real estate sale is HUGE, at 24.3% as the bare minimum in the state of California.
  • So you want to 1031 exchange for a duplex you rent out in order to buy an “investment property” in Hawaii a few years before you’re ready to retire.  Now you can defer all tax to the sale as long as you have a minimum of 2 weeks of income per year.  If client makes any repairs, it does not count against the two weeks, so people tend to “do repairs” and stay there for a while.
  • Now, say you plan on using this investment property as your retirement property a few years down the line.  The purpose of the exchange is strictly for investment or business use, but after a minimum of about 2 years of use as an investment you have the ability to use it as you please without risking the IRS coming after you about it.
  • 1031 is not a condition of sale, you can notify the buyer, but don’t need to advertise it as the buyer does not have to have anything to do with the exchange.  However, when writing up the contract for the sale you must put in language stating that the seller is doing an exchange and you furthermore must hire a company that does 1031 exchange in house like IPX, they have 45 days after the escrow closes to identify a property to exchange (loophole for that is listed in the process of an exchange section).

Now that we have that out of the way, we can discuss the…

Process of a 1031 Exchange:

  • Prior to closing the sale of the Relinquished Property the Exchanger and a Qualified Intermediary must enter into an Exchange Agreement which requires the Qualified Intermediary to
    • acquire the Relinquished Property from the Exchanger and transfer it to the buyer (by direct deed from Exchanger to buyer)
    • acquire the Replacement Property from the seller and transfer it to the Exchanger (by direct deed from seller to Exchanger).
  • Also prior to closing the sale of the Relinquished Property, the Exchanger must assign rights under the Relinquished Property sale contract to the Qualified Intermediary and provide notice of assignment to the buyer.
  • At closing, net proceeds from the Relinquished Property sale (exchange funds) are paid directly to the Intermediary to be held in a separate account for the Exchanger until used to purchase Replacement Property.

From here, the Exchanger now has the responsibility to find a suitable exchange property.  They are given 45 days after escrow closes to identify property, with the possibility of a 21 day post-escrow window and a further possibility to appeal for a 15 day extension; this sums up to a total possible 81 days to identify property which should allow for plenty of time for the Exchanger to decide.

 

There are 3 main rules to identifying one or more properties to acquire in the exchange which are as follows:

  • The 3 property rule- the maximum number of properties that can be acquired under normal circumstances is 3.
  • The 200% rule- the aggregate value of the properties can not exceed 200% of the selling value of the property that had initially been exchanged (again also under normal circumstances). 
  • The final rule is called the 95% rule and really only exists as an exception to the first two rules and is extremely uncommon.  What it does is allows for more than 3 properties worth up to and exceeding 200% of the original’s selling value to be purchased in the exchange provided that the Exchanger acquires 95% of the total sum value of the identified properties within the exchange period.  This effectively never happens in practice and the rule can almost essentially be ignored.
  • Once the property has been identified, there is a 135 day period during which the property is to be purchased and the Exchange comes to a close.

 

Now that we know what a 1031 Exchange is, it’s time to cover our second big answer to our question…

What is a DST, and why do I want one?

  • Simply put, a deferred sales trust is a financial vehicle that allows investors to transfer highly appreciated assets to a trust for the purpose of deferring payment of capital gains taxes and generating an income stream. These trusts are an alternative to 1031 exchanges and direct sales and can protect your assets from being too highly taxed.
  • A DST is a contractual arrangement between an individual and a trust in which the individual sells property to the trust in exchange for the trust’s agreement to pay the individual a certain amount over an agreed period of time.
  • Deferred Sales Trusts are completely legal as they have been reviewed by the IRS, FINRA, as well as National Tax Law Firms
  • 1031 timelines and restrictions make it difficult to find a quality deal, especially combined with the lack of inventory to choose from.
  • Interest rates in the US are hovering near 40 year lows.
  • Investors can allocate more funds to their portfolio than what would result from a direct sale.
  • DSTs can be used to invest back into real estate or a business, .  As long as the money stays in the trust and does not go directly back to you without first going through the trust, you can do virtually anything with it.

Process of a Deferred Sales Trust:

  • Go to MyDSTPlan.com and get in contact with the Estate Planning Team.  The EPT is a group of legal and financial service professionals dedicated to helping preserve wealth and protect estate.  Deferred Sales Trusts are exclusively offered by the EPT along with a handful of specialized tax attorneys with unique experience. 
  • Assets to sell are sold to a third party trustee in consideration of a secured DST installment contract
  • The third party DST trustee buys the assets, who sells them to a cash buyer
  • The cash buyer pays to the trust in exchange for the assets
  • The secured DST installment payments are made to the seller from the trust
  • DST payout timeline: the trust is written in 10 year increments traditionally up to 30 years, but can be extended out 10 years at a time indefinitely; meaning that the payout can be extended to 40, 50, or more years as long as you are willing to adjust the payout to fit the newly adjusted timeline.

FAQ:

  • Is there a fee for the DST?  Generally speaking it will be 1.5% to write the trust, and a trust deed fee, 25 to 50 point basis fee, 1% advisory fee, and small management fees.
  • Can two parties join in a 1031 together to buy a new property together?  Yes, both parties can be involved in a 1031 and do it so long as they keep the same taxpayer and make tenants in common.
  • What happens if you are involved in a reverse exchange?  The buyer cannot have both properties in your name at the same time so the 1031 exchange company creates an LLC to buy the property, buyer loans money to buy the house, do a NNN lease agreement, then do a proper 1031 exchange if the property closes.
  • What is a NNN lease agreement?  It is an agreement that the lessee is to take care of all repairs and renovations to the property being leased.  Many major companies go into NNN leases when they have chain stores such as Home Depot or McDonalds.

 

Click here to go back to the top

Click here to go to 1031 Exchange

Click here to jump to Deferred Sales Trusts

Striking Example of Teamwork

 

On Thursday, August 2nd, the whole Title Guy Team went to the annual WEREP Strike It Up for Charity Bowling Extravaganza.

The entire bowling alley was packed full of industry titans throwing down the gauntlet to see who had the best bowling team, who would reign supreme.

Pictured: all of the teams we could fit into one picture. There were too many people to photograph together at once!

But that wasn’t really why any of us were here.  Each and every one of us came because we’re all a team and that’s what you do as a team.  You come together with your teammates, make them look good (sometimes by being not so good yourself), do a little victory dance, and build each other up.

Victoria had the best victory moves of the night.

 

 

 

 

 

 

And that’s why we’re all here at the end of the day.  We do things like this together because the team that can have fun together is the team that stays together.  That’s what we’re all about in Team Title Guy.  The better we work as a team, the better we can help build you up and take care of all of your title needs.

“Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.” –Andrew Carnegie

Meeting w Masters Returns

     In this upcoming session of Meeting with the Masters we have Greg Burns of IPX1031, Tom Bernath of Ticor Title, and Joel Harworth from 1 on 1 Financial here to discuss the ins and outs of 1031 Exchanges and Deferred Sales Trusts and how to use them to your advantage.   In June, we talked about all of the intricacies of probate, and before that we covered bankruptcy, real estate transactions, and divorce.  Well, in this month’s Meeting you’ll want to be there and sit in on our conversation as long as you’re one of the following:
  • You want to know more about growing your business with investors
  • Either are or know someone with multiple properties to manage
  • Want to learn more about deferring capital gains
  • Or just really like us!

We host our Masters series because we want to help raise awareness to the quirks of the fickle mistress that is the title industry, you won’t want to miss a thing.

We hope that you can make the time to come out to the Red Hill Country Club on August 14th at 10 am and look forward to seeing you there!  The link to the event page can be found HERE.
Here is a video overview of one of our previous classes!

BE Aware, Early Wire Discount Fraud

Vivienne, a first time home buyer, was involved in the purchase of a $1.8 million home. The transaction was getting ready to close. She received an email from what appeared to be her settlement agent’s assistant, but in reality the message was generated from a fraudulent email account. The message read as follows:

Hi Vivienne,
Congratulations on your real estate purchase. This is just a friendly reminder that we are scheduled for closing Friday June 1st. I will be the escrow closer handling this transaction. Find attached Settlement Statement and our Wiring Instruction for outstanding balance of your down payment, amount due is $753,252.73.However, we will give you a 20% off Escrow fee (a total of $500 off) if wire can be initiated earlier, due to our current workload as we pride our–self in client satisfaction and the ease at which we conduct our business, It is advisable that wire be initiated Earlier to the attached bank wiring Instructions as this will guarantee that funds are available for disbursement at your scheduled closing, if yes amount due will be $752,752.73Kindly confirm that you have received Wiring instruction attached and advise if wire can be initiated today you can reply to this email if you have any questions or call or text me on my direct line 615 392 5075 looking forward to a successful close.

Vivienne called the number and heard a voice recording saying the escrow officer’s assistant’s name, but the voice sounded foreign and robotic. Vivienne was suspicious the email was not truly originating from her escrow officer’s assistant and that the voice phone number was not truly dialing Chicago Title Company.

Vivienne promptly forwarded the email to her real estate agent. The real estate agent called the escrow officer using a known, trusted number and confirmed the home buyer’s suspicions, the email was fraudulent. Fortunately for all involved the homebuyer did not fall for the scam and the transaction was able to successfully close on time.

How It Works

A scammer typically gains access to a transactional participant’s email account. With access to the real email account, the scammer can observe email exchanges and create fake emails that look authentic, including email signatures and company logos, of various transactional participants. Using these authentic looking email, the scammer is able to impersonate anyone involved in the transaction and send fraudulent wire instructions to the consumer, diverting their money to a fraudster’s account.

5 Warning Signs To Watch For

  • Make a decision now!
    Rushing someone to make a financial commitment may be more than an irresponsible business practice — it could be a sign of fraud. A wire transfer of funds should never occur until the consumer has time to verify the bank wire information with trusted resources.
  • Change in wire instructions
    Consumers likely are the target of a real estate scam if the settlement agent or title company informs them previous wire transfer instructions were incorrect or changed, and they provide new instructions. Settlement agents and title companies rarely change their bank accounts.
  • Discounts for sending a wire transfer
    The processing of a wire transfer costs the sender and recipient, fees and costs. Settlement agents do not offer discounts for consumers depositing their down payment and closing costs via wire transfer.
  • Does the message make sense?
    Most fraudsters perpetrating the crime do not speak English as their first language. Their messages contain misuse of grammar, spelling and punctuation. Often times, the message does not make complete sense.
  • Account Name = Settlement Agent/Title Company
    The account name on the wire instructions often contains the name of an unknown individual or company, and not the name of the settlement agent or title company. In some cases the account name has portions of the settlement agent name combined with an individual’s name. If the account name is not an exact match, the wire instructions are not accurate. That said, the account name in the wire instructions is not the only thing that should be relied upon.

A wire transfer is an immediate form of payment. It is sometimes irreversible, even if fraud is involved. If a consumer falls prey to the diverted wire transfer scam, not only could they lose the money they transferred, but they would still need to provide the funds required to close on their property purchase.

Real estate professionals should communicate to consumers that they need to call to verify the wire transfer with a known, trusted source at the settlement agent or title company who can identify the details of the specific transaction, as well as verify the bank wiring information.

Consumers should be warned not to send any money without talking to a live person with details only the settlement agent would know and a complete verification of the wire information.

In addition, consumers should never use the phone number provided in the email containing the instructions, they should use phone numbers they have called before or can otherwise verify. And, they should never send an email to verify, as the email address may be incorrect or the email may be intercepted by the fraudsters.

 

(2018, July). Discount for early wire. Retrieved from: http://fraudinsights.fnf.com/vol13iss07/article1.htm

Introducing the ALL NEW TicorAgent ONE

Team Title Guy is proud to announce a brand new version of our app, to be released on July 18th.  TicorAgent has been completely rebuilt from the ground up as the next logical progression for the tool you all know and love!  That’s right, we’ve spent the last two years working on a full revamp of Real Estate’s #1 closing cost app and slated a release date for July 18th.

In case you didn’t know what exactly it is TicorAgent does, the short answer is… everything you could possibly want in a closing app!  It has all the calculators you could need: monthly affordability, price difference between renting and buying, a Refi calculation tool, how extra payments will change any other calculations, loan balance, and even more calculators all for free.  You can use the TA ONE app on up to five devices, it offers geography specific reports, quick text features, all kinds of payment information, and the list just goes on.  Stay tuned for an upcoming in-depth guide on how to use this powerful tool in the near future!