Houston We Have a Problem in Burbank, CA….
I just don’t get why things are so complex – For instance – I attended a 1031 Exchange seminar. This is an IRS regulation that allows for investment properties to be sold and another purchased, of like kind, within the following criteria – a list of three potential properties have to be identified within 45 days and purchased within 180 days. So you only have 45 days to select three potential properties…Yikes…Ok, but here is where it gets complicated – the transaction must be completed before filing your tax return. So if you sold your investment property on December 31st you would only have until April 15th to complete your 1031 exchange or have to file an extension on your tax return. See what I mean?
Complex transactions can involve simple purchases. Financing brings a new wrinkle; appraisals add more stress to complicated transactions. Additionally, unless you are paying cash, the idea of fixing and flipping has become more difficult.
I know some regulation was needed; things were pretty crazy a few years ago. But some regulation doesn’t mean the type of regulation we ended up getting. If you have a generic, middle of the road transaction, you are in good shape…but go outside that range and you are in some difficult and treacherous waters. One size doesn’t fit all.
Realtors can’t keep up with the changing regulations. It is impossible because someone, who has never helped buyers/sellers handle their real estate transactions, are creating policies and procedures to govern an industry that needs more than just regulation. They create things that are difficult or impossible to implement and follow. Regulations, like those recently created called HAFA – for example – that govern short sale transactions – had to have been created by someone who never dealt with a short sale and has no idea how understaffed and confused the banks are. One of the most important regulations in HAFA is requiring the banks to reply to an offer for short sale within 10 days. The question becomes how many files are on the desk of one asset manager at the bank?
We need to point our efforts to regulate more toward the middle now – I hope to see things more ‘centered’ in the coming year.