While the north Texas real estate market has remained fairly strong, many other parts of the country aren't fairing as well. The number of real estate agents is down both locally and nationally, mostly due to the amount of business being down (and the business that is out there being tougher to handle). The National Association of REALTORS lost 140,000 members (a decline of 10.5%) between December 2007 and December 2008. Most active agents believe that this was mainly part-time and/or under-trained agents effected. However, there are some previously successful agents who just aren't able to shift their business strategy with the changes in the market. The latest statistics from industry analyst REAL Trends shows that the losses, at least among the largest real estate franchises in the U.S., aren't distributed equally among companies. According to the 2008 REAL Trends 500 report, there has been a major shift among the rankings of the top players. After just moving into 4th place within the last few years, Keller Williams Realty has jumped again (even in tough times) to become the 3rd largest real estate franchise in the U.S.:

The Top-Ranked Real Estate Franchises by Agent Count

What this shows is that, while the housing market is (and real estate agents are) struggling, some companies' models are struggling more than others. While the top two are operated as separate companies, for example, they are both owned by the same parent company: Realogy. I had heard that they were pretty deep in debt, but I had no idea... If you Google "companies that might not survive 2009" you'll find articles like this about the parent company:
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Realogy Corp. (Privately owned; about 13,000 employees). It's the biggest real-estate brokerage firm in the country, but that's a bad thing when there are double-digit declines in both sales and prices, as there were in 2009. Realogy, which includes the Coldwell Banker, [Century 21] , ERA, and Sotheby's franchises, also carries a high debt load, dating to its purchase by the Apollo Group in 2007 - the very moment when the housing market was starting to invert from a soaring ride into a sickening nosedive. Realogy has been trying to refinance much of its debt, prompting lawsuits. One deal was denied by a judge in December, reducing the firm's already tight wiggle room.
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I don't know that they'll really go under, in fact Realogy responded to this article saying that much of their debt isn't due until 2013 (not denying the high debt load though). The fear is, agent commission splits at these brokerages, their royalty fees, office fees, etc. may have to be adjusted to cope with the debt. This could chase away more of their agents (a primary source of income) and that certainly won't help with the debt problem. The future remains to be seen though. Keller Williams Realty (KW), on the other hand, has no parent company and they carry zero debt (wow!). KW is based out of Austin Texas, they just started franchising less than 20 years ago (compared to Coldwell Banker who has been around since the early 1900s), and KW has always had an "Agent First" mentality. Besides offering some of the industry's best training and technology, they operate each of their franchise offices with an open books policy so that everyone can see what the owners make, what other agents make, and what's spent on everything from salaries to coffee supplies. This is almost unheard of and, when combined with the company's "profit sharing plan", it helps create an electric environment KW calls their "Culture." The "Culture" at most Keller Williams offices is indescribable. Agents are taught an abundance mentality as they help one another to succeed by sharing knowledge and training (rather than hording information and business "secrets" as in the scarcity environment at most traditional brokerages). You have to ask yourself: How has such a relatively young, non-traditional real estate company come so far so fast? Obviously, even in tough times, Keller Williams may not be perfect but they must be doing something right.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com
 

Lets start with the second half of the title. The "First Time Homebuyer Tax Credit" is basically an $8,000 gift from the government; but it's not just for those who have never owned a home before. Those who haven't owned a home for the three years prior to buying another will also qualify. So, if you last owned a home in June of 2006, you could buy one in July of this year and still get $8,000 (or 10% of the purchase price, whichever is less) back on your taxes. So, buying any real estate as your primary residence for $80,000 or above (before the plan expires on Dec. 1st) should make you eligible for the $8,000. Just be sure to check on all the details of qualification with your CPA. Here are a few scenarios to help explain the "Tax Credit":

Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.

Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.

Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.

So how does this "Tax Credit" help you with a downpayment (since you don't get the money until AFTER you've bought the home and filed your taxes)? There are some states looking into offering short-term loans (i.e. a loan until you get your tax credit) and some people are going to employers or other sources to ask for this help. However, this may prove difficult as downpayment monies are typically not allowed to be "borrowed" funds. So, I had an idea involving removing all of your payroll witholding. This would allow you to save this money each month towards your downpayment. Then, when the taxes are due, up to $8,000 would be canceled out (or able to be repaid) by the tax credit. Check with your CPA for advice before adjusting your payroll witholding, but this may be just the thing to help save that downpayment this year. Just know that if you don't buy a home before Dec. 1 (and meet all other criteria of the First Time Homebuyer Tax Credit) you'll still owe all of those taxes to Uncle Sam. Rates are low and who doesn't want an extra $8,000? So, let's get house hunting!

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com