Internal Revenue Code Section 1031(a)(1) provides that “[n]o gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanges solely for property of like-kind to be held either for use in a trade or business or for investment.”

The requirement that both the property relinquished in a tax deferred exchange and the replacement property received be held for use in a trade or business or for investment, often referred to as the “holding requirement,” has been the subject of significant litigation between the IRS, state tax authorities and taxpayers over the years.

One area of significant litigation between taxpayers and tax authorities involves deferred exchanges in which a selling taxpayer changes the manner in which the relinquished property has been owned immediately before a sale, or changes the form of ownership of the replacement property soon after the exchange has been completed.

To the extent that the change in the form of ownership is viewed by tax authorities as a transfer of the property to another person or legal entity, the exchanger may be treated as having not satisfied the holding requirement.

In a typical case, the exchanger is a partner in a partnership or a member in a limited liability company that owns investment property that would qualify for a tax deferred exchange under Section 1031(a), but the partner wants to engage in a 1031 exchange separate from the partnership.

Alternatively, the exchanger may own investment property in fee or with others as tenant-in-common, but desires to contribute the replacement property to a limited liability company or partnership in which the exchanger would be a member or partner following the completion of the exchange. Unfortunately, the exchanger’s ownership interest in the investment property (either before the exchange or following its completion) is held in the form of a partnership interest or membership interest (treated as a partnership interest under federal tax law).

In either such case, Internal Revenue Code Section 1031(a)(2)(D), a provision added in a 1984 amendment, specifically excludes partnership interests from among the classes of property eligible for tax deferral, whether the partnership interest is relinquished property or replacement property.

Given the foregoing constraints, an exchange client who is a partner in a partnership may ask, “so what if I take a distribution of a fractional interest in the relinquished property in liquidation of my partnership interest ahead of the sale and transfer my newly acquired interest in the investment property to the buyer as part of a standard delayed exchange?”

This strategy is sometimes referred to as a “drop and swap.”

Alternatively, an exchanger may complete a tax deferred exchange in a manner consistent with the taxpayer’s longstanding ownership structure and, following the exchange, contribute the replacement property to a partnership or distribute the replacement property to the partners as tenants-in-common. This strategy is sometimes referred to as a “swap and drop.” Either approach presents an issue under Section 1031 to the extent that the partnership and the partner or tenants-in-common, as the case may be, are considered different legal entities for purposes of federal income tax laws.

Regardless of the holding period issue associated with the “drop and swap” or “swap and drop” approaches, there are several Ninth Circuit cases that have permitted deferral despite a change in the form of ownership immediately before the exchange or after the completion of the exchange. A 2009 Order of the Oregon Tax Court in Dep’t of Revenue v. Marks, Or. Tax (Case No. TC 4797; http://www.ojd.state.or.us/tax/taxdocs.nsf/) illustrates that these favorable Ninth Circuit cases are still good law (at least in Oregon) and provides a good analysis of the arguments in those cases as they relate to the holding requirement under Section 1031. Perhaps most importantly, the order demonstrates that the controversy between taxpayers and tax collectors over the timing of changes in ownership prior to or following an a tax deferred exchange continue.

The exchangers in the Marks case were family members who owned several apartment houses in Oregon. Louis and Marie Marks, husband and wife, owned one apartment complex as tenants by the entirety. Louis’ mother and sister owned another complex as tenants in common.

Commencing in 1999, both apartment properties were sold in separate tax deferred exchanges and the Marks family members acquired a third property in 2000 as replacement property to complete the exchange. Although the replacement property was initially received by the exchangers as tenants-in-common, the family members transferred the replacement property to a general partnership shortly after the exchange.

In 2005, the Oregon Department of Revenue (“Department”) issued a notice of assessment for 2000 and subsequent tax years. The deficiency in 2000 resulted from the Department’s determination that both tax deferred exchanges failed to meet the holding requirement under Section 1031 and resulted in taxable sales.

The Marks family appealed the determination in the Magistrate Division of the Oregon Tax Court. The Magistrate Division ruled in favor of the taxpayers and the Division appealed the Magistrate’s decision. On appeal, the taxpayers filed a motion for partial summary judgment seeking an order confirming that the transfer of the replacement property did not violate Section 1031(a)’s holding requirement as a matter of law.

The principal case cited by the taxpayers, Magneson v. Commissioner, 753 F2d 1490 (9th Cir 1985), involved an exchange of a fee simple interest in real property for an interest as a tenant-in-common in other real property and, immediately afterward, the property was contributed to a partnership in exchange for a partnership interest. Id. at 1492.

The issue of “first impression” before the Ninth Circuit was “whether property acquired in a like-kind exchange with the intention of contributing it to a partnership under Internal Revenue Code § 721 is ‘held’ for investment within the meaning of Internal Revenue Code § 1031(a).” Id. The Ninth Circuit found that the “crucial question in a section 1031(a) analysis [was] continuity of investment in like-kind property.” Id. at 1495-96.6. The economic situation of the taxpayers must be fundamentally the same as before to qualify for nonrecognition. Id. at 1494.

Applying the law as determined in Magneson to the facts, Judge Breithaupt concluded that taxpayer’s in Marks were entitled to a judgment in their favor provided that the purpose of the partnership was to continue to hold the replacement property for investment.

In response, the Department argued that Congress’ amendment of Section 1031(a) in 1984 to add subsection 1031(a)(2)(D) specifically excluding “any exchange of ‘interests in a partnership’” legislatively overturned Magneson. Reviewing the legislative history, Judge Breithaupt noted that:

The aim of the 1984 amendment was to prohibit the exchange of one partnership interest for another. . . . section 1031(a)(2)(D) does not speak to exchanges for a partnership interest “for” property, but rather is limited to exchanges “of” interests in a partnership. The law at the time, as the House-Senate Conference Committee saw it, did not “state specifically whether an interest in one partnership may be exchanged for an interest in another partnership as a tax-free exchange of like-kind property.” HR Rep No 861, 98th Cong, 2d Sess, reprinted in 1984 USCCAN 1445, 1554 (Conf Rep). In the House Ways and Means Committee Report (the House Report), what “particularly concerned” the committee was the potential abuse of the IRC section 1031 provisions that could occur if the provisions were used “to facilitate the exchange of interests in [‘burned out’] tax shelter investments for interests in other partnerships. HR Rep No 432, pt 2, 98th Cong Sess, reprinted in 1984 USCCAN 697, 897-98.” Marks, at p. 10.

Since the purpose of subsection 1031(a)(2)(D) was to prevent exchanges of partnership interests and did not address the question whether a property could be held for investment in a partnership (a matter that was addressed in Magneson), Judge Breithaupt concluded that the amendment did not implicate the Magneson decision.

Finally, the Department argued that changes to Oregon’s partnership law should change the result reached in Magneson. The rationale in support of the result in Magneson was based on a comparison of interests of tenants-in-common and the interests of partners in partnership property. Under the California law applied in Magneson, a partnership was not treated as an entity separate from its owners for non-tax purposes.

Amendments to Oregon’s partnership law in 2000 made clear that “[a] partnership is an entity distinct from its partners” and “property owned by an Oregon general partnership in 2000 is property of the partnership and not of the partners individually.” (citing ORS 67.060).) Under these principals, the property was transferred to an entity separate from its owners thereby violating the holding requirement.

In rejecting the Department’s contention that Oregon non-tax law should control, Judge Breithaupt noted that the Magneson court’s analysis of interests of tenants-in-common and the interests of partners turned on the question of control and the purpose of the partnership:

[O]f paramount importance is not so much the details of the state law rights as between co-tenants and partners, but rather whether there is continuity of investment as opposed to a “cashing out” and the purpose of any partnership to which property received in an exchange is contributed. See Magneson at 1496.

The Department made two other related arguments: (i) that the substance of the exchange was a transfer of an interest in real property for a partnership interest such that the form of the exchange should be disregarded (a “substance over form” argument) and (ii) that the court should apply the step transaction doctrine to ignore the receipt of replacement property as tenant-in-common (the “step transaction doctrine”).

Both legal doctrines may be applied by courts in tax controversy cases in which a taxpayer has engaged in a series of transactions to reach a result that avoids tax at any intermediate step but which would produce a tax if certain intermediate steps where removed. In this case, however, the court found no policy reason that would justify reformulating the exchange as an exchange of real property for a partnership interest.

[I]n this case, . . . the steps and substance of what . . . [occurred] are . . , each permitted. The point of Magneson is that taxpayers may engage in IRC section 1031 transactions and then, pursuant to a pre-existing plan or intent, contribute replacement property to a partnership. What taxpayers did they are permitted to do. The department is not authorized or permitted to rearrange facts to produce a different transaction.

Since the limitation on the exchange of a partnership interest in Section 1031(a)(2)(D) did not implicate the holding requirement under Section 1031(a), changes in state law regarding the partnership as a separate legal entity did not, in the opinion of Marks court, contradict the logic of Magneson and the court granted the motion for summary judgment in part, but remanded the case for further factual development on the question whether the partnership was formed for the purpose of continuing to hold the property for investment.

Despite the reasoning of the court in Magneson, there are a variety of reasons that taxpayers should continue to exercise caution when changing the form of ownership immediately before or after a tax deferred exchange.

First and foremost, the taxpayer favorable decision in the Marks case is binding only in Oregon for purposes on state income tax. The IRS or a federal Tax Court in Oregon could reach a contrary decision despite the state tax court’s decision. Second, there are conflicting cases in other jurisdictions in which courts have reached a contrary result on similar facts.

For example, in True v U.S., 190 F3rd 1165 (1999), the Court of Appeal for the 10th Circuit applied the step transaction doctrine to a case in which the taxpayer took title to the replacement property as tenants-in-common and thereafter transferred the replacement property to a partnership. In so holding, the court determined that the taxpayers received the replacement property as an agent for the partnership, so the taxpayer’s momentary receipt of replacement property was ignored and the exchange failed.

Despite the reasoning in Marks, a tax authority might conclude that changes in state law regarding the legal nature of a partnership as an entity separate from the partners would amount to more than a mere change in the form of ownership as discussed in Magneson. The state partnership law applied in Magneson assumed that the partnership was a mere aggregation of ownership interests of the individual partners.

By extension, a transfer to an entity other than a state law general partnership, such as a limited partnership or limited liability company, would provide additional problems under the rational in Magneson. The rights and liabilities of the investors in those entities may be more limited than those of a partner in a general partnership.

Finally, a court might not agree that Section 1031(a)(2)(D)’s exclusion of partnership interests from property that may be exchanged under Section 1031 is as narrow as the Marks court concluded. In Marks, the court reviewed the legislative history surrounding the adoption of Section 1031(a)(2)(D) and concluded that Congress was concerned with the exchange of partnership interests as a means to exit burned out tax shelter partnerships.

As such, the court determined that the limitation on the exchange of partnership interests should be limited to “exchanges of partnership interests” rather than a conversion of a direct ownership interest in property to a partnership interest in the same property following an exchange. Although the reasoning of the Marks court is compelling (at least in this author’s view), there is certainly no guarantee that a court in another jurisdiction would agree.

In the end, there is still substantial risk that the IRS or a state tax authority will challenge a “drop and swap” or “swap and drop” scenario along the lines discussed in the Marks case. Where a party anticipates a change in the form of ownership before or after the completion of a tax deferred exchange, there is no substitute for careful advanced planning.

Given enough time and careful planning, most or all of the pitfalls of a change in the form of ownership illustrated in the Marks case can be avoided. The trouble is, too often there is little or no tax planning until just before or after the initiation of a tax deferred exchange.

Jonathan Christianson, the author of this article, is a tax attorney with Asset Preservation Inc. in Granite Bay, Calif. Visit Asset Preservation for more information on 1031 Exchange – Asset Preservation.

To have and hold for investment under Section 1031 is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

Click here to have a look at the latest digest so you can see for yourself just how nifty it is.

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Besides, subscribing to the digest is the best way to make sure you don’t miss anything that’s posted here.

Wowzers! The latest blog digest is out! is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

“We’ve worked well together,” Isom said of Williamson. “Bill’s been a good teacher.”

Isom said he started at the AREC as an investigator in 1987 and was named assistant deputy executive director in 1991. In 1996, he said Williamson recruited him for the position of deputy executive director and endorsed him for executive director.

Isom said he was offered the executive director position at the end of January and he accepted it, pending the state of Arkansas signing off on the promotion. Out of consideration to Williamson, Isom said he declined announcing his new job until March 1.

“Bill spent a lot of time here,” Isom said. “I wanted him to have his sendoff.”

Isom said the AREC may have a new executive director, but some things won’t change.

“Bill and I have grown together and we have a lot of similar views on things,” he said. “I will continue the course we’re on.”

Isom said the emphasis on consumer protection will continue under his watch and one of the best ways to protect the public is to make sure real estate licensees learn what they can and cannot do under Arkansas law and AREC rules.

Isom said he has an interest in building an educational program for real estate brokers in the state. He said real estate agents typically follow the leads of their brokers – making sure those brokers are well versed in the requirements of the law and their responsibilities in representing buyers is a solid way to make sure that information will spread to agents.

Isom pointed out, however, that there is a problem with setting up a dedicated broker education program in Arkansas. There are 9,663 active real estate licensees in Arkansas and 2,219 brokers in the state. The fact there are 2,219 brokers in Arkansas means there are that many real estate offices in the state.

Most educational courses for agents are provided by independent instructors. Those instructors, Isom said, have to make a living so they offer courses that attract as many licensees as possible. For that reason, he said there aren’t as many broker-specific courses as the AREC would like to see.

The problem with not providing educational courses tailored to brokers has to do with supervision. Some brokers in the state feel there are some competing offices that don’t train their salespeople well enough to do simple tasks – such as filling out sales contracts – that are associated with buying and selling real estate.

In other words, there are brokers in Arkansas who feel obliged to help agents from other offices do their jobs in order to make sure buyers and sellers are well represented. Isom said it’s not the job of brokers to make sure competitors are representing their clients well and it’s a problem when they believe they’re called on to do just that.

Fortunately, that problem is one that can be solved with some effort, thanks to the quality of real estate education providers in the state. Isom said those instructors are continually in touch with the AREC and those people are often the best conduit between the AREC and licensees. Instructors are directly in touch with licensees and, as such, have a good handle on the day-to-day situations agents face.

Another thing Isom said he will continue is a program started under Williamson through which the AREC visits all new real estate offices at least twice. The first visit is an introductory one and the second one involves looking at transactional records and office files to make sure they comply with state law and AREC regulations.

Also, he said the AREC will work to clean up a problem in the renewal process – some offices still have people who haven’t renewed their licenses who are buying and selling property. Similarly, the AREC will crack down on people who haven’t completed their continuing education requirements.

“The bottom line is public protection,” Isom said.

If you’ve gotten the idea that Isom is a believer in using education as a means to protect the public, you are right. He said the AREC has a duty to insure the competency of people who obtain licensees and then making sure those agents remain competent throughout their careers.

Along those lines, Isom said the post-education program is one of the most important ones created. In Arkansas, licensees take both a set of courses prior to receiving their licenses and then have 12 months to complete another set of courses after receiving their licenses.

He said the courses taken prior to receiving a license are theoretical, while the ones taken afterward are more practical in nature. Isom said that ideally licensees start working on that post-licensing requirement after they’ve had a few months experience – just enough to “wonder what’s going on” so they can ask informed questions of their instructors and receive coaching on real life situations.

Isom said he’s well aware that Williamson’s retirement is a major event in Arkansas, but the AREC is in a good position to weather it well.

“Fortunately for me, the Real Estate Commission is well postured for a transition of this magnitude,” he said. “Governor (Mike) Beebe just reappointed two commissioners, Realtor® Karen Crowson and consumer member Jim Newell. Their experience combined with that of consumer member Sylvester Smith – who is serving his second term – and Realtors® Chairman Vic Hiryak and Vice-Chairman Ken Gill, provides a base of solid leadership for the agency.

“Also, the AREC currently has well-experienced and highly capable staff members, each of whom knows their jobs well and are committed to providing quality service to the citizens of Arkansas.”

The Arkansas Realtors® Association has enjoyed a very good relationship with the AREC, due in part to the willingness of Williamson to submit articles to ARA to inform its members about what is required of them under state law and AREC rules. Those articles have been featured in both this publication and the blog located at ArkansasRealtors.com/blog.

Isom said he will continue that practice and his first columns will start appearing in ARA publications in April.

We at the ARA wish Isom all the best and look forward to working with him.

Gary Isom’s Biography

Gary Isom
Executive Director
Arkansas Real Estate Commission
Phone: (501) 683-8016

A native of north central Arkansas, Gary Isom graduated from Clinton High School in 1972.

Isom graduated from the University of Central Arkansas in 1976 with a Bachelor of Business Administration Degree in Business Management with an emphasis in Economics.

Isom obtained his real estate salesperson license in 1987.

In 1989 Isom received the Certified Financial Planner designation from the College of Financial Planning in Denver, Colo..

In 2009 Isom received the Arkansas Governmental Manager designation from the Arkansas Public Administration Consortium and will receive the Certified Public Manager designation in 2010.

Isom was employed as an investigator with the Arkansas Real Estate Commission in 1987, subsequently was promoted to assistant deputy director in 1991, and then to Deputy Executive Director in 1996. He was named executive director in 2010.

With twenty plus years of administrative, educational and investigative experience in a regulatory agency, Isom has been involved in coordinating and improving statewide educational programs, exploring new issues and proposed changes to laws and regulations, conducting investigations and office reviews, and reviewing and making recommendations for real estate contracts and examinations. Isom has also managed the Arkansas timeshare registration program for several years.

As deputy executive director, Isom was responsible for administration of the real estate license law, time-share law, Commission regulations, Recovery Fund, Real Estate Education Program, and assisting in directing the operation of the Commission.

Isom is currently serving as the 2010 president of the Association of Real Estate License Law Officials (ARELLO). He previously served as treasurer, director and district vice-president of District 2, chaired or served the ARELLO Education Committee, Internet Technology Committee, Exam Certification Council, Distance Education Council, ARELLO Timeshare Regulatory Task Force and the Timeshare Advisory Group.

During 2005, Isom was appointed by then Gov. Mike Huckabee to the Chief Information Officer Council which was charged with guiding the usage and prioritization of information technology (IT) in state government. In this capacity, Isom represented 52 small boards and commissions.

And the new executive director of the AREC is … Gary Isom is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

Fortunately, he’s sent a copy to the Arkansas Realtors® Association (ARA) so we can share his latest newsletter with you. Want a copy? Just click here to download it and you’re all set.

As usual, Darden has done a great job in putting together a newsletter that’s full of information for both Realtors® and consumers.

What’s in this edition of the newsletter? An article about a proposal from the National Association of Realtors® to turn Fannie Mae and Freddie Mac into non-profit entities, a piece about lower mortgage insurance rates for people with good credit, some advice about how to responsibly manage credit cards and, well, just a lot of great information. So download the newsletter get educated.

Of course, we at the ARA love it when members send in great information to share with our readers. Got an electronic item to send over? Click here to email a document or link to Ethan C. Nobles, the ARA director of media relations.

March issue of ‘Cleburne County Realtor® Education Newsletter’ available is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

That said, click here to download the Excel version of the report and here for the PDF. A copy of the above graphic is located here.

You’ll notice, of course, that both list prices and inventories went up this week. We’re used to seeing inventories increase, but list prices have declined steadily since the first of the year.

It could be that some real estate industry watchers are correct in stating that list prices have dropped about as far as sellers are willing to drop them and that increased prices will be the norm. We could be simply looking at an anomaly and prices will drop again in the near future.

It’s too early to tell what’s influencing list prices right now, so it’s something we’ll keep an eye on in the weeks to come.

Every week the Arkansas Realtors Association collects and distributes the average and median list prices and the number of homes in inventory (homes for sale) for single family, new and existing houses in four markets. Those markets are Benton and Washington counties in northwest Arkansas, the Fort Smith/Van Buren areas (Crawford and Sebastian counties) in west Arkansas, the Jonesboro area (Craighead County) in northeast Arkansas and the Little Rock-North Little Rock-Conway Metropolitan Statistical Area (Faulkner, Grant, Lonoke, Perry, Pulaski and Saline counties) in central Arkansas. While those four markets don’t tell the whole story, looking at them together gives us a pretty good idea about developing trends in markets throughout the state.

Average/median list prices, inventories for March 8 is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

He emails a Monday Morning Briefing every week to the Arkansas Realtors® Association and it’s about time we started posting those so our readers can enjoy them. To have a look at today’s Monday Morning Briefing, click here.

We’ll post these weekly as we get them, so keep ‘em coming, Roby! By the way, anyone else wanting to send anything in that is of interest to our readers is encouraged to do so by clicking here to email Ethan C. Nobles, the ARA director of media relations.

‘Monday Morning Briefing’ from Talk Business is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

Let’s say, for example, a Realtor hands you a business card identifying him as “Skipper Benton, ABR, CRS, GRI.” What Skipper is trying to tell you is that he has earned the Accredited Buyer Representative (ABR) designation, is a Certified Residential Specialist (CRS), and holds the Graduate Realtor Institute (GRI) designation.

Anyone holding a real estate license in Arkansas is required to take six hours of continuing education a year. The National Association of Realtors (NAR), however, offers its members the option of taking courses to specialize in various aspects of real estate transactions – training that is above and beyond what the state requires of licensees and what the Arkansas Realtors Association requires of members.

Not all real estate agents licensed in Arkansas choose to become Realtors, but the ones making that choice are encouraged to learn a specialization to better serve clients. Among the most common designations are the ABR, CRS and GRI.

The GRI program, simply put, is a good place to start for Realtors wanting to expand their knowledge and better serve clients. Some Realtors wanting more specialization might look into the training necessary to earn the ABR designation.

An ABR designation is evidence of a Realtor trained to “look at transactions from the buyer’s point of view.” In other words, Realtors with the ABR designation have had training on how to find a good selection of homes for buyers, gauge the fair market of houses, help position offers so they are attractive to sellers and generally take care of all aspects buyers face in transactions.

Sellers might concentrate on finding Realtors with the CRS designation. Realtors wanting to earn the CRS designation must be trained in listing and selling strategies. Those include effective ways to market properties so potential buyers are reached effectively – very important for sellers.

The CRS designation is build on the notion that simply putting a house on the market isn’t enough. A seller must know how to price the home effectively, spruce it up so it’s attractive and market it so buyers are impressed with it. A Realtor with the CRS designation strives to help sellers find that fair price and make sure potential buyers take a look at it.

Realtors spend a lot of time and money earning designations for one simple reason – to provide the best possible service to clients. In all, there are 23 designations recognized by the NAR and you can have a look at all of them by pointing your favorite Internet browser to realtor.org/education/realtor_university/designation.

House to House is written by ARA Director of Media Relations Ethan C. Nobles and is distributed weekly to publications in the Natural State by the Arkansas Realtors® Association. Want a copy of the original column? Just click here for the Microsoft Word version.

Specialized Realtors strive to make transactions easier for buyers and sellers is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

We at the Arkansas Realtors® Association are glad of that as we can pass such items on to our legions of blog-happy readers. The latest great piece of information was sent in by Bob Downum over at Weichert, Realtors® – Downum Group and it lists out the tax benefits of owning a home.

Just click here to take a look at that report.

Should anyone want to send over something that will be of value to our blog readers, please click here to attach it to an email and get it over to Ethan C. Nobles, ARA director of media relations.

Tax advantages of owning a home is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

We at the ARA are glad of that because Fredinburg generally has some great information to share. The latest item she sent is no exception.

What did she send over? Why, some information about the importance of credit scores in the lending process. You can click here to find out for yourself how Arvest treats credit scores these days. Arvest is the largest bank in the state, of course, and finding out a bit about how that institution regards credit scores is mighty important.

We invite people like Fredinburg to send over information like this so we can pass it on to Arkansas Realtors and the public. If you’ve got something you’d like to see posted on this blog,  just click here to send an email to Ethan C. Nobles, the ARA director of media relations.

Arvest’s take on credit scores is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.

Here’s a little experiment:

What if your neighbor asked you to invest $10,000 in a new company he says is going to be the next Google. Would you do it, on his suggestion alone? I sure hope not.

If your brain was working properly, you would, at a minimum, want more information – preferably a lot more information for that kind of money.

The scenario offers a good lesson for you in deciding how you should go about marking your real estate business. Especially today – smack dab in the middle of the information age.

The lesson is as simple as this: people need good information to make good decisions.

How are you keeping potential new and past clients informed? Or, are you at all? If not, keep reading.

As a Realtor®, you know better than anyone how this industry can get buffeted by the economy’s erratic winds. Things change – sometimes faster than we want. But it’s your job to stay up on as many of the changes as you can, and not just keep up with them, but to share them with the public.

Just by the act of sharing information itself, you’re making a smart move. Why? Because buyers and sellers want to work with professionals who know and understand the market. You become seen and known as the expert. If you’re sharing information, believe me, your stock is going up in the minds of your target markets.

To keep that stock rising, I recommend sending out regular market reports to your farm area, past clients, the media and to any others who might lead to business for you. And here are a few ideas on what you might include:

* Comparable sales and other market stats for the year along with pictures if available
* Quotes from local experts on local real estate market trends
* New services or plans in the area
* Assessor’s maps or title company information
* Economists thoughts on prices and interest rates
* School news, sporting events, plays, concerts etc.
* And your listings, of course!

But I also recommend tossing in some lighter fare (especially for your farm area). Perhaps:

* Stories and quotes from residents in the community about their lives in the area.
* Reviews of local restaurants and other businesses or services in the area
* Information on fun and inexpensive leisure activities
* Gardening tips, barbecuing ideas, etc.

As you can see, some of the items lead to interaction, which is one key reason for sending the reports in the first place. They help you build a rapport with readers. You want them to respond, not only with ideas for your reports, but with questions about real estate. Again, you slowly but surely become the “go to” expert on real estate matters. Exactly the position you want!

So in every edition, include strong calls to action for several items in the report – be they recipes, special events or more information or your real estate services.

And go for a distinctive look that lets you stand out far above what the competition is sending – probably dull postcards and clichéd flyers. You might consider an aerial photo of the farm area, a picture of an unusual or well-known landmark from the area or even one of your current listings.

But remember, the secret ingredient to making this all work really well is the quality of information. Make it interesting, informative and above all, useful.

Let me know what’s on your mind. Have you had success staying in front of clients with tools that are similar to market reports? Send me an e-mail at Bob@CorcoranCoaching.com.

Bob Corcoran is a nationally recognized speaker and author who is founder and president of Corcoran Consulting Inc. (CorcoranCoaching.com, 800-957-8353), an international consulting and coaching company that specializes in performance coaching and the implementation of sound business systems into the residential or commercial broker or agent’s existing practice.

We look forward to hearing from you.  Sign up today for your complimentary business consultation. http://www.CorcoranCoaching.com/bpw.php.

How market reports can boost your business is a post from: The Arkansas REALTOR®

©2010 The Arkansas REALTOR®. All Rights Reserved.