Jan. 13, 2016: What is dotloop? Case study for real estate agents on tax benefit

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. See more

Here’s something interesting for real estate agents: Dotloop. What the heck is that? dotloop is a transaction system, based in Cincinnati, Ohio that allows the paperwork associated with a multiparty real estate transaction to be completed through their proprietary online network. “Control your entire business from one paperless platform. Turn the hunt for paperwork into the art of driving growth.” In other words it puts lenders and real estate agents on the same page so that they’ll all see the same documents.

 

I received this note from a loan officer on a particular loan situation that would be of interest to Realtors. “There was a situation where a seller that had outstanding collections and judgments did not have enough equity from their sale proceeds to pay off what was owed. We were fairly certain that all of our work getting these borrowers, whose financial situation was very complex, was for naught. Fortunately the Realtor handling this transaction was persistent. The seller did not have any money to seek professional representation (Lawyer Up). Bottom line the seller was short about $18,500. There were 3 separate judgments that had to be satisfied. It took the Realtor three days of intensive negotiations. One of the judgment holders would not budge, however between the other two judgment holders and the Realtor working a little leaner we were finally able to finish this transaction. The seller did get to keep the shirt on his back. The take away here is, if you are representing a seller please ask, if there are any issues (unpaid taxes, unpaid child support, judgments, etc.) that may prevent the smooth close of the escrow. It is not a very comfortable question to ask, but who wants to do all the work, wait 30 -45 days and not get paid? Prior Planning Prevents Poor Performance! Cliché but true.”

 

Real estate agents might be interested in what the IRS web site has to say about the difference between a tax deduction and a tax credit:

 

Tax credits and tax deductions can help reduce your overall income tax liability. Every year, millions of taxpayers search for credits and deductions that can help them save money. While you should take advantage of as many of these as possible, don’t overlook the fact that tax credits and deductions are not the same thing.

 

There are a few basic differences between tax credits and tax deductions. Tax credits provide a dollar-for dollar reduction of your income tax liability. This means that a $1,000 tax credit saves you $1,000 in taxes. On the other hand, tax deductions lower your taxable income and they are equal to the percentage of your marginal tax bracket. For instance, if you are in the 25% tax bracket, a $1,000 deduction saves you $250 in tax (0.25 x $1,000 = $250).

 

A tax credit is always worth more than a dollar-equivalent tax deduction, because deductions are calculated using percentages. Referring to the numbers above, you can see that a $1,000 credit offers $750 more in savings than a $1,000 deduction.

 

In order to gauge the housing market, the National Association of Realtors disburses a monthly survey to 50,000 practitioners. The November 2015 findings of The REALTORS® Confidence Index noted there has been no substantial market change from October to November; however, the market activity compared to last year is improved. Considering the average decline in unemployment, low interest rates, and mortgage program availability, mortgage lenders should be churning out home loans. According to this recent survey, there are several reasons home buying is stalling.

 

A guy goes to the doctor. After a myriad of day long tests the doctor comes back to him and says, “Well, I’ve got good news and bad news.”

Patient: “Okay, what’s the good news?”

Doctor: “You have 24 hours to live.”

Patient: “Oh my God. So what’s the bad news?”

Doctor: “I should have told you yesterday.”

 

(I know – oldest joke in the book.)

Rob

 

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