Monthly Archives: April 2013

Plano, TX Demographics

As of the census[2] of 2010, there were 259,841 people. in the 2000 census there were 80,875 households, and 60,575 families in Plano. The population density was 3,102.4 people per square mile (1,197.8/km2). There were 86,078 housing units at an average density of 1,202.8 per square mile (464.4/km2). The racial makeup of the city was 66.9% White, (58.4% non-Hispanic White) 7.6% Black, 0.36% Native American, 16.9% Asian, 0.1% Pacific Islander, 3.86% from other races, and 3.0% from two or more races. Hispanic or Latino of any race were 14.7% of the population.

Of the 80,875 households, 42.0% had children under the age of 18. Married couples accounted for 64.3%; 7.5% had a female householder with no husband present, and 25.1% were non-families. Approximately 20.2% of all households were individuals, and 2.9% had someone living alone who was 65 years of age or older. The average household size was 2.73, and the average family size was 3.18.

Data indicates that 28.7% of Plano’s population is under the age of 18, 7.0% is 18 to 24, 36.5% is 25 to 44, 22.9% is 45 to 64, and 4.9% who is 65 years of age or older. The median age is 34 years. For every 100 females, there are 99.3 males. For every 100 females age 18 and over, there are 97.2 males.

According to a 2007 estimate, the median income for a household in the city was $84,492, and the median income for a family is $101,616.[36] About 3.0% of families and 4.3% of the population live below the poverty line, including 4.6% of those under age 18 and 7.8% of those age 65 or over.

Plano was the highest income place with a population of 130,000 or more in 2000. Plano was ranked the most affluent city with a population over 250,000 in the United States with the lowest poverty rate of 6.3%. Its neighbor to the northwest, Frisco, was ranked the richest city for the population of under 250,000 in the United States with a 2.7% poverty rate. In 2007, Plano had the highest median income of a city with a population exceeding 250,000 in the nation at $84,492.[37] As of 2010, Plano has a median income of $103,913 annually. According to crime statistics, there were four homicides in Plano in 2006, the lowest homicide rate of all U.S. cities of 250,000 or more population.[38]

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The History of Plano, TX

Settlers came to the area near present-day Plano in the early 1840s.[12] Facilities such as a sawmill, a gristmill, and a store soon brought more people to the area. Mail service was established, and after rejecting several names for the budding town (including naming it in honor of then-President Millard Fillmore),[13] the locals suggested the name Plano (from the Spanish word for “flat”), a reference to the local terrain. The name was accepted by the post office.[13] In 1872, the completion of the Houston and Central Texas Railway helped the city grow, and the city was officially incorporated in 1873.[13] The population grew to more than 500 by 1874.[12] In 1881, a fire raged through the central business district, destroying most of the buildings.[12][13] The town was rebuilt and business again flourished through the 1880s. Also in 1881, the city assumed responsibility for what will eventually become Plano Independent School District (PISD), ending the days of Plano being served only by private schools.[12]

The population of Plano initially grew slowly, reaching 1,304 in 1900 and increasing to 3,695 in 1960.[12] By 1970, Plano began to feel some of the boom its neighbors had experienced following World War II. A series of public works projects and a change in taxes that removed the farming community from the town helped increase the overall population of Plano. In 1970, the population reached 17,872,[12] and by 1980, the population had exploded to 72,000.[12] Sewers, schools and street development kept pace with this massive increase, largely due to Plano’s flat topography, grid layout and planning initiatives.

In 1981 the Plano City Council adopted the City’s official logo based on a design submitted via a community contest by long-time Plano resident James R. (Jim) Wainner, a professional artist and graphic designer. City of Plano Code of Ordinances, Chapter 2, Article I, Section 2-1 (b) states that no person, firm, organization, or corporation other than the city shall adopt, use, display, incorporate, or appropriate the official logo of the city as any part of any material, equipment, or other matter of such person, firm, organization or corporation, without written application to and approval of the city council.

During the 1980s, many large corporations moved their headquarters to Plano, including J. C. Penney and Frito-Lay, which helped the city grow. By 1990, the population reached 128,713,[12] dwarfing the county seat of McKinney. In 1994, the city was recognized as an All-America City.[14] By 2000, the population grew to 222,030,[12] making it one of the largest suburbs of Dallas. Plano is completely locked in by other municipalities and cannot expand in area, and there is little undeveloped land remaining within the city limits. However, one large tract of land is being developed as of July 2012. Turnpike Commons at the intersection of Renner Rd and the George Bush Turnpike (bordered also by Shiloh Rd to the east). The development will feature apartments, medical facilities, restaurants, a Race Trac gas station, and a hotel.

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Transportation Made Easier in Plano

Plano is one of 12 suburbs of Dallas that opts into the Dallas Area Rapid Transit (DART) public transportation system. During most of its membership in DART, Plano was lightly served by bus lines, but in recent years, the Red Line of the DART Light Rail project has opened stations in Downtown Plano and at Parker Road, which provide access to commuters traveling to work elsewhere in the Dallas area. Approximately 1% of the city’s population uses DART. The Parker Road station began charging for parking for non-member city residents on April 2, 2012. The program is called the Fair Share Parking initiative.

Plano was the first city in Collin County to adopt a master plan for its road system. The use of multi-lane, divided highways for all major roads allows for higher speed limits, generally 40 mph (64 km/h), but sometimes up to 55 mph (89 km/h) on the northern section of Preston Road. Plano is served directly by several major roadways and freeways. Central Plano is bordered to the east by U.S. Highway 75, the west by Dallas North Tollway, the south by President George Bush Turnpike, and the north by Texas State Highway 121. Preston Road (Texas State Highway 289) is a major thoroughfare that runs through the city.

Plano opened a new interchange at Parker Rd. and U.S. 75 in December 2010. The single-point interchange is the first of its kind in Texas. The design is intended to reduce severe congestion at this interchange. According to reports traffic congestion has been reduced 50-75%.

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Top 10 Real Estate Tax Deductions for Homeowners

Posted by Matthew T Smoot March 28- Filed in  Mortgage and Finance

Since the deadline to file income taxes approaches, we need to take a new look at the changing tax landscape for homeowners. The dynamic atmosphere in Washington, D.C. has a different effect each year on which tax breaks are proposed, rescinded, changed, and extended for taxpayers who own a home.

Thanks to the efforts of many real estate industry groups like NAR, many of the tax benefits that homeowners enjoy–which were on the chopping block over the past few months–have been protected and extended through the 2013 tax season.

 

1. Mortgage Interest Deduction

The mortgage interest deduction has always been the most-beloved tax benefit of home buyers in the U.S. New homeowners’ monthly mortgage payments are made up almost entirely by interest for the first few years. Their ability to deduct that interest can result in a healthy reduction in tax liability. Affordability for first-time home buyers is directly linked to their ability to deduct the interest on their mortgage.

Homeowners who itemize their deductions can deduct the interest paid on a mortgage with a balance of up to $1 million. While there is some movement to limit the total itemized deductions for taxpayers with higher incomes (over $400,000), the current deductions holds for all tax brackets. Americans save around $100 million every year by deducting mortgage interest on their tax returns.

 

2. Home Improvement Loan Interest Deduction

The interest on home equity loans used for “capital improvements” to a home can also be a tax deduction. On loans with balances of up to $100,000, the interest is tax-deductible for a homeowner who uses the loan to make improvements to the home such as adding square footage, upgrading the components of the home, or repairing damage from a natural disaster. Maintenance items like changing the carpet and painting a home are usually not included as capital improvement projects.

 

3. Private Mortgage Insurance (PMI) Deduction

Homeowners who make a down payment of less than 20 percent are usually paying some sort of Private Mortgage Insurance. PMI (sometimes abbreviated MIP or just MI), can be a few dollars to hundreds of dollars per month, and it is a large portion of many homeowners’ mortgage payments.

If your mortgage was originated after Jan 1, 2007, and you have PMI, it can be a tax deduction. The deduction is phased out, 10 percent per $1,000, for taxpayers who have an adjusted gross income between $100,000-$109,000 and those above that level do not qualify. The extension of this tax deduction in 2013 was one of many last-second saves by real estate industry advocates.

 

4. Mortgage Points/Origination Deduction

Homeowners who paid points on their home purchase or refinance can often deduct those points on their tax returns. Points, often called origination fees, are usually percentage-based fees which a lender charges to originate a loan. A one percent fee on a $100,000 loan would be one point, or $1,000.

On a home purchase loan, taxpayers can deduct the entirety of the points that they paid in the same year. On a refinance loan, the points must be deducted as an amortization over the life of the loan. Many taxpayers forget about this amortized benefit over time, so it’s important to keep good records on the deduction of points on a refinance.

 

5. Energy Efficiency Upgrades/Repairs Deduction

Homeowners can deduct the cost of the building materials used for energy efficiency upgrades to their home. This is actually a tax credit, one which is applied as a direct reduction of how much tax you owe, not just a reduction in your taxable income.

10 percent of the total bill for energy-efficient materials can be used as a tax credit, up to a maximum $500 credit. Insulation, doors, new roofs, and many other items qualify for the energy efficiency credit. There are also individual limits for certain items, such as $150 for furnaces, $200 for windows, and $300 for air conditioners and heat pumps.

 

6. Profit on Sale of Real Estate Deduction

If you’ve sold a home in the past year, you’re likely aware that individuals can claim up to $250,000 of profit from the sale tax-free, and married couples can claim up to $500,000 tax-free. Of course, there are some requirements to escaping the capital gains tax on this profit.

The home must be a primary residence. This means that you must have lived in the home, as your primary residence, for two of the past five years. You could rent it out for years one, three, and five, while living in it for years two and four. In this way, a homeowner could potentially claim this tax break on multiple homes within a fairly short time frame, but each tax-free sale must occur at least two years apart from the previous tax-free transaction.

 

7. Real Estate Selling Cost Deduction

For those lucky folks whose profits on the sale of their home might exceed the $250k/$500k limits, there are still some ways to reduce the tax burden. The costs of selling the home can be significant, and those in themselves can be claimed as tax deductions.

By adding up all of the fees paid at closing, capital improvements made to the home while you owned it, money spent to make repairs to damaged property, and marketing costs necessary to sell the home, you can add a significant figure to the cost basis of your home. This basically raises the original price you paid for the home. Your cost basis begins with the original price of the home, and then adds in the improvement and selling costs. When the new cost basis price is compared to your selling price, it reduces your potentially-taxable profit on the home significantly.

 

8. Home Office Deduction

The home office tax deduction is often cited as a deduction that increases your likelihood of being audited. While the raw numbers might add some credibility to that perception, it’s really the way a home office is deducted that gets some taxpayers into audit purgatory.

This deduction, when used correctly, is just as safe as any other. Homeowners deduct a percentage of their mortgage, utilities, and repair bills in direct proportion to the amount of their home that is dedicated office space.

There are a few hard and fast rules to live by when deducting the costs of your home office. The home office must be your principal place of business (the primary office location where you get the majority of your work done). It needs to be exclusively used for business (it can’t be your kitchen by day and office by night). You need to be realistic with its size and use (unless you enjoy audits).

 

9. Property Tax Deduction

New homeowners often don’t know that their property taxes are deductible. While it may sound strange to have a tax-deductible tax, the overall effect is that you don’t pay income tax on money that was spent on property taxes.

Homeowners should be careful to only deduct the amount of property tax actually paid to their local municipality for the year. This is not necessarily the amount you paid to your escrow account, and should not include any other city/county fees that might potentially be on the same bill as your property taxes.

 

10. Loan Forgiveness Deduction

The Mortgage Debt Forgiveness Relief Act of 2007 was created when short sales were becoming a new and growing part of the real estate market. An underwater homeowner might convince their lender to agree to a short sale of their home at $100,000, even though they owe $150,000 on their mortgage. While the lender forgives the extra $50,000 owed after the short sale, the government views it as $50,000 in taxable income (a gift from the lender to the borrower).

The Debt Forgiveness Act temporarily relieved the taxpayer of that burden, but was set to expire this year. Through much effort, it was extended along with many other homeowner tax relief measures this year and homeowners can continue to claim this tax relief in 2013.

IRS-suggested disclaimer: To the extent that this message or any attachment concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. This message was written to support the promotion or marketing of the transactions or matters addressed herein, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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3 Myths of the Market Recovery

If you follow the news about real estate, you’ve likely noticed a dramatic direction turn in the tenor of headlines over the last year or so. From underwater seller woes, foreclosure highs and listings lagging on the market with no sale in sight, the stories have turned to reporting on multiple offer buyer woes, interest rate lows and listings flying off the market with no inventory in sight!

Every time the market turns – in either direction – the flood of information and opinion about it always comes with a few myths and misconceptions that have the potential to send you off course in terms of how you respond and reposition yourself and your business in the current market climate.  And this time is no exception:  here are five myths of the current market rebound that we should bust, with no further ado.

1.  This is a momentary uptick – nothing to get excited about.

No one can say for 100% certain how long this ascending market will last.  The unemployment rate is still relatively high. Relatively large numbers of people are dropping out of the job market altogether – though some of this is likely due to retiring Boomers and people shifting to self-employment.

But the good signs are also plentiful.  Banks have gotten savvy about releasing their foreclosed inventory in a trickle, rather than flooding the market with it; the foreclosure rate has declined, increases in buyer activity have driven home value increases in many area, resolving some of the appraisal issues that so plagued the market during the downturn.  And looser lending guidelines with low interest rates are making it easier for buyers to, well, buy – when they are victorious over other offers, that is.

And aside from the issue of how long the uptick or recovery will last, my advice is this: you should get excited. As I see it, there are 3 different types of agents.  The first type are the agents who blow stay stuck in the fear and disappointment of the past few years

The second are the agents who will get just a little temporary bump in revenues, but will fail to fully reap the business-building opportunities of today’s market because they lean back and take the few extra calls the upturn brings them, instead of diving in and doubling down on their marketing and skill-building.

Then there will be agents who take full advantage of this rebound – whether it lasst 6 months or 6 years – as an opportunity to grow their businesses and reposition them for a new level of lasting prosperty, by:

  • increasing their listing business
  • increasing the price point of their average sale
  • closing deals for new buyer niches, and
  • using their increased income to level up their marketing, give their brand stronger footing in their local market (one way: our Local Ads) and render their business more recession-resistant than ever.

You get to decide which type of agent you’ll be.  Up to you!

2.  The famine is over – it’s feast time, baby!

Yes – it is true that there is much abundance on the market, compared with what we’ve had to deal with in the last 5 or 7 years – an abundance of buyers, for certain, and also a relative abundance of loan moneyBut that doesn’t mean that it’s easy money time, nor thaat big profits will just fall into your lap, though I happen to believe there is massive opportunity for agents who want to grow their businesses to do it now.

It will just take some work, because there are some critical scarcities to deal with, too.  Inventory is low – extremely low, compared with buyer interest.  As a result, buyers are having trouble closing, which also impacts some owners who would be sellers (see #3, below).  Prospective listings are definitely out there, but all the smart agents are after them. And over the past decade, both buyers and sellers have developed a whole new level of expectations, technological savvy and expertise demands.

It can be a time of abundance, but big profits won’t just fall into your lap. If you want to use this market recovery to build and grow a thriving, long-term business, you’ll have to up your game, when it comes to marketing, fluency with the market data metrics that matter to buyers and sellers, and client management skills.

3.  Sellers are your for the picking.

There is certainly a pent-up cache of potential listings, representing people who wanted to sell but were stuck in underwater mortgages that are now – or will soon be – back in the black.  This is a potentially massive growth opportunity for agents who want to increase their seller business.  But one thing that many agents are overlooking is that most of these sellers are also prospective buyers.

So, when they see and hear about low inventory conditions and the problems buyers are having being successful in multiple offer situations, many simply stay put, disqualifying themselves from ever even calling you in for a listing interview because they don’t want to deal with the possiblity of selling and finding themselves unable to buy.

As you market to your farm, write posts or answer questions about your local market on Trulia Voices, or reach out to your past clients, address this very real concern that is holding some prospective sellers back from listing their homes.  Educate your local market audiences about possibilities and insider tricks you can offer to help workaround this issue, like strategic transaction sequencing, rent-back agreements and listing to sell contingent on buying.

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The North Texas Real Estate Market in One Pic…

The North Texas Real Estate Market in One Pic...

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April 8, 2013 · 8:35 pm

Why Do Short Sales Take So Long?

It’s a question many real estate agents hear from clients: Why do short sales take so long?

Despite improving real estate markets, short sales and foreclosure  sales will be with us for the foreseeable future. Many homeowners are  still underwater, and at any time in the coming years, these folks may  face a situation, such as a job transfer or divorce, requiring them to  sell at a loss.

Short sales happen because the loan on the property is larger than  the sale price minus all the sale expenses. With a short sale, the  seller is asking the bank to take less than the amount owed.

Even if you’ve made an offer and the seller has accepted it, it’s not a done deal. The seller’s bank must approve the sale, and this is where the big delays can happen. Banks are losing money in a short sale and  aren’t too keen on it. It’s understandable. Imagine that you loaned a  friend $100, and he came to you later saying he could only pay you back  $75. Would you cave in easily? Probably not.

It’s important to know that a buyer and their agent have no control  over the process. The success of a short sale — and how long a short  sale takes — relies heavily on a listing agent.  If the listing agent  isn’t experienced with short sales, you’re likely wasting your time. A  good short sale listing agent will properly advise the seller and have a thorough knowledge of the bank and its process before your offer is  accepted.

Here’s a look at why short sales can take so long, along with tips for what you can do about it.

The seller’s bank must review the short sale package

In order to approve the sale, the lender requests a complete short  sale “package” from the seller. Much like the package you must submit to get a loan, the seller must submit their finances. The lender will want to see the seller’s debts and assets, review their credit score and the contract to purchase the home. After all, why would a bank approve a  short sale if the seller had $1 million sitting in the bank?

What you can do: A good listing agent will have the  short sale package in hand and even completed upfront. Once an offer is  accepted, the agent can simply add the contract and buyer’s information  and submit it.

Documents get lost, pages go missing, signatures are left blank

Most banks require hundreds of pages in the short sale package, and  many of those pages require signatures from buyers, sellers and agents.  If one page is missing or one signature left blank, the document doesn’t get processed. Often, the listing agent will fax in 100 pages and just  wait. Sometimes it will take a month to get a response from the bank,  informing the agent that things are missing.

What you can do: Be proactive. The listing agent  should call the bank after submitting the short sale package, especially if sent by fax. Confirm that all documents have been received. Make  sure to get the name and phone number of the person you speak to.

Some documents quickly become outdated

It could be weeks between the time the documents get “processed” and  when the information hits the desk of a negotiator, who actually reviews and negotiates. Does one bank statement come at the beginning of the  month while all the others come at the end? That one bank statement may  soon be outdated, and the bank will require an updated one. If that’s  the case, it could take the lender weeks to realize this and another  week to contact the seller or their agent.

What you can do: Review the statement date on each  credit card and bank statement so you’ll know if a new one will arrive  soon. If so, send it over right away.

The lender wants more information

The lender may ask to see the buyer’s proof of funds, review the  preliminary title report or request more verification of the seller’s  hardship (job loss, divorce, job transfer). The negotiator could request just about any additional information.

What you can do: The seller and agent should be  ready to respond, because a delay could add a few more weeks to the  process. Try to imagine yourself as the bank and think of everything  that might be asked for. Provide as much information as you can upfront.

2 loans complicate everything

The short sale process is difficult enough with one bank. Imagine two banks, each with its own processes, that don’t cooperate? It could set  everyone back months. The second lender may request more information  before approval. Or, the second lender may issue an approval good for 30 days. If lender No. 1 approves on day 31, the seller must go back to  the first lender to get re-approved.

What you can do: Understand the approval timelines for each bank and anticipate deadlines.

The deal could die at the last minute

Once the bank has a complete package and you get a negotiator on the  phone, there is light at the end of the tunnel. After all this time, the negotiator may counter the buyer on price. Or they may only approve the sale if the seller contributes money. They could always ask for the  commission to be lowered. No matter what they say, the bank’s request  could kill a deal in the moment. And there’s no way to anticipate  exactly what they will come back with.

What you can do: Don’t think the bank will simply  approve a low offer. If the seller has money in the bank, they need to  be prepared to contribute or you may have to come up with more money.  Sometimes the bank is just looking at its bottom line and doesn’t care  how everyone gets there. Buyers, sellers and agents must work together  to make the deal work.

Foreclosure trumps everything

Time and again, all parties wait and wait and follow along the  process — only to see the sale denied. What’s worse is that sometimes  the foreclosure department at the same bank does not work in conjunction with the short sale department. A good offer for a short sale may be on the table, but the seller may be six months behind on payments, causing the foreclosure process to kick in. And the foreclosure process can  trump everything. When this happens, the buyer no longer has a deal on  the table because the seller, forced into foreclosure, is no longer the  seller. In a foreclosure, the home belongs to the bank.

How to speed up a short sale

The best way to expedite a short sale approval, and therefore your  escrow, is to be certain the seller’s real estate agent is experienced  with short sales. The seller’s agent interfaces with the bank 24/7. If  the agent isn’t experienced in short sales, chances are this process  will drag on and on.

An experienced short sale agent will know how certain banks work,  what to anticipate and how to best work through the bureaucratic  process. But even the most experienced short sale agent can come up  against brick walls or challenges they just can’t overcome. If you see a short sale home you love but don’t have much confidence in the listing  agent, try not to fall too deeply in love with it. You’ll only be  disappointed if the sale doesn’t go through.

For questions, please contact Kimberly Davis with Keller Williams Realty, Plano at:  www.KimCan.com

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