Helping the Client and the Broker, Too
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Editor’s Note: This article first appeared in the January 1973 issue of the Real Estate News Observer.
While real estate brokers and Counselors are busy fulfilling wishes of clients and getting them better benefits, it is quite advisable that one does not forget to take care of oneself.
It is a sad fact that most licensees don’t remember to build their own estate — the same as they do for clients. Estate building should be done with tax laws and regulations in mind. What this means is that estates can be built with things other than money.
For example, as soon as a licensee has some holding power (ability to make payments on property acquired), he can benefit tax-wise by acquiring properties in corporate names in lieu of cash commissions.
If “paper” is taken in lieu of cash commissions, it is recommended that it be taken in the broker’s name as he may claim such paper at fair market value for tax purposes.
It is this writer’s opinion that it is always best to speculate in corporate names rather than a licensee holding in his own name those properties designated either tax shelters and/or income producing plus whatever other benefits he may realize from them.
However, the licensee should not spend a lot of time “looking after” his properties. It is suggested that they be put under professional management because the licensee’s time is too valuable to be handling tenant complaints that are always there.
In the 1950s, Richard Reno, founder of the Society of Exchange Counselors, observed that if people exchanged real estate it could solve many of the real estate circumstances existing in San Diego’s overbuilt market. He saw exchanging as an alternative to the unavailable cash buyer. He believed that people who owned real estate did not necessarily want to totally divest themselves of real estate ownership, but were uncomfortable in the circumstances surrounding their current ownership. In effect, the problem was not with the property, but with the people who owned it. In his opinion, there was no bad real estate, only inappropriate or untimely ownership. This premise led Mr. Reno to an idea that resulted in the modern real estate exchange (equity marketing) business we enjoy today.
