Why You Should Hire a Real Estate Professional

If you are a first-time homebuyer or seller, employing the services of a real estate professional could be one of your best decisions. They may seem a bit expensive but they have the knowledge that you do not possess when it comes to the house buying process. This will help you get hold of good bargains. In addition, it would be more efficient in raising funds for your purchase and help you avoid hassles after closing.

In this article, we round up some reasons why you should seek assistance from real estate professionals.

real estate professional agent

What is a real estate professional?

Qualifying as a real estate professional is a great way to lower your tax bill and reap additional benefits that are exclusive to investors.

To qualify for this category, you will have to meet the following according to real estate law:

  1. More Than 50% Rule: The Internal Revenue Service (IRS) requires that at least 50 percent of an individual’s working hours be devoted to real estate property trades or businesses in order to qualify for the passive activity loss rules. Thus, a person who works full-time at a job outside of the real estate and spends fewer than 20 hours per week managing a rental property will generally not qualify as a real estate professional.
  2. 750 Hour Requirement: To become a real estate professional, one must spend at least 750 hours per year performing services related to real estate trades or businesses. The 750-hour requirement is calculated on an annual basis (from January to December). There is no limit on when the hours may be worked, but they must be worked within the tax year.

However, the 750-hour test for determining whether an individual is a real estate professional is not met if the individual performs personal services as an employee in a real property trade or business unless the individual is also a 5% owner of the employer.

  1. Single Taxpayer Requirement: For each taxpayer, the 50 percent rule and 750-hour requirement must be proven annually in order to be considered. Married couples filing jointly are an exception to this rule. If both you and your spouse meet the above requirements, you may be able to claim the real estate professional deduction, even if one spouse earns their primary income outside real estate.
  2. Material Participation: As a result of being primarily engaged in this trade or business, you must materially participate in the management and operation of such property during the tax year where material participation is defined as making significant management or operational decisions at the business level and taking part in the activity with an expectation that it will continue to earn income.

The real estate professional designation gives investors the ability to write off business expenses based on the income they have generated by using their properties. The 2013 investment income tax levies an additional 3.8% surtax on passive income, including all rental income. This applies to the lesser of (1) an individual’s net investment income for the year; or (2) the excess of that person’s modified adjusted gross income over a threshold amount.

The benefits of working with a real estate professional

Working with real estate agents has many benefits for you. There are a lot of things that you should consider hiring the services of an expert in real estate. Probably, you are finding it hard to find properties for sale or even to sell your own property. You need someone who can help you with this and provide you with the information you want, especially if you are going to purchase or sell your home for the first time.

They have the experience and knowledge

Professional real estate agents are trained, qualified, and have experience. They know how the real estate industry works and have been through the process of buying and selling property many times before.

Real estate agents offering real estate professional services are able to track market trends, including long-term data on housing prices, which helps them make realistic recommendations regarding prices for both buyers and sellers.

They can help you navigate the process

The purchase of a home is one of the most complex financial decisions most people will ever make. The process is fraught with details, and it has changed further amid the housing crisis. To help you navigate the real estate investing process wisely, seek the help of a real estate professional.

Professional real estate agents suggest that you get preapproved before home shopping. A preapproval letter helps you set your budget, and if you do find a great home, you’re ready to write an offer immediately.

They can help you find the right property

A real estate agent can help you find a house that matches your needs and budget. To ensure you don’t waste time looking at properties that don’t meet your criteria, be sure to make a list of the most important factors when buying a home. Agents use their knowledge of the local market, as well as their contacts with other agents, to help you find homes before they hit the market.

After listening to your wants and needs, they could suggest neighborhoods that are not necessarily on your radar but may be worth considering. It’s also possible the agent will recommend expanding your search area to areas with less competition or better deals.

They can negotiate on your behalf

The best way to achieve the best real estate deal is to hire an experienced real estate agent. Real estate agents are trained negotiators, and they can use their experience to present your case in the best light. They will also keep your information confidential from competing interests and strive to get you the best possible price. 

The best part? You and your agent can negotiate the terms of a contract and make concessions that are unrelated to the price. This can include a longer closing date, special repairs, and upgrades to the property, or even getting the seller to pay some of your closing costs.

They can provide peace of mind.

More than the professional real estate headshots or being a professional real estate photographer, those who offer real estate professional services can help you navigate the complex world of buying and selling property with peace of mind.

A real estate professional will be able to provide you with expert advice and even help you find the right loan. A real estate agent will be able to offer expert advice on how to get a mortgage and what types of loans are available. They can also help you negotiate the best possible interest rate for your home loan.

Give real estate experts a chance and you will see results. They are there for the common good and aim to give clients the best advice for their benefit. Let them know your needs and preferences and you will be guided accordingly.

References

Bryniarski, B. (2020). Tax rules for real estate professionals. Association of International Certified Professional Accountants. https://www.aicpa.org/resources/article/tax-rules-for-real-estate-professionals

Esajian, J. (u.d.). Real Estate Professional: Qualifications & Tax Deductions. Fortune Builders. https://www.fortunebuilders.com/real-estate-professional/

Marks Paneth. (u.d..). Real Estate Investor Vs. Professional: Why It Matters. Marks Paneth. https://www.markspaneth.com/blog/2017/real-estate-investor-vs.-professional-why-it-matters

Nitti, T. (2017, March 1). Navigating the Real Estate Professional Rules. The Tax Adviser. https://www.thetaxadviser.com/issues/2017/mar/navigating-real-estate-professional-rules.html

 

About Anita Cooper

Anita Cooper is a copy and content writer with a vendetta against bad copy. She helps real estate tech companies grow their pipeline by providing lead gen copy and content.

Have world real estate news to share? If you do and would like to interview, feel free to contact Anita at [email protected].

Comments

  1. I love how you point out that professional real estate agents can help you navigate the processes. My sister and her husband are looking to buy a home but are having trouble finding things within their budget. Hiring a real estate agent might be a huge help to them when trying to find and close on a home.

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