A/B Trust – A type of Revocable Living Trust used by married couples. In this type of living trust, two trusts (trust A and trust B) are created at the time the first spouse dies. By dividing the couple’s estate into two trusts at the first death, each spouse can pass the maximum amount of property allowed to avoid federal estate taxes. One trust, usually trust A, is often referred to as the marital deduction trust and the other trust, usually trust B, is often referred to as the shelter trust.
Accumulation Trust – A type of trust which retains and accumulates income for longer than a year, instead of paying all of the income out to the beneficiaries at least annually. These types of trusts are also known as complex trusts.
Administrator - The person designated by the court to manage and distribute a probate estate when there isn’t a will. If there is a will, the person so designated is called the executor (male), executrix (female), or personal representative.
Adult – Any person over the age of 18 or 21 years. The age of an adult depends on specific state laws.
Affidavit – A sworn, written statement executed under oath in front of a witness or witnesses.
Affidavit of Domicile – A sworn, written statement verifying city, county and state of residence.
Affidavit of Survivorship - A sworn, written statement verifying the identity of the survivor in a joint tenancy or other property ownership relationship.
Ancillary probate - A probate proceeding conducted in a state other than the state where the decedent lived and the primary probate occurs.
Annual Exclusion - The amount of property the IRS allows a person to gift to another person during a calendar year before a gift tax is assessed and/ or a gift tax return must be filed. The amount is increased periodically. There is no limit to the number of people you can give gifts to which qualify for the annual exclusion. To qualify for the annual exclusion, the gift must be one that a recipient can enjoy immediately and have full control over.
Ante-nuptial Agreement - A contract between two potential marriage partners specifying how the property owned by each prior to marriage and owned individually or jointly during marriage will be divided should the couple divorce.
Ascertainable Standard – The IRS defined standard which governs the use of trust B property and prevents the property from being considered part of the trustee’s property for estate tax purposes. The standard is defined as “health, education, maintenance and support” of the surviving spouse and children.
Asset Protection - Protecting your property from legal problems and taxes during your life and after your death.
Basis – A tax term, which refers to the original or acquisition value of a property, used to determine the amount of tax that will be assessed. The basis is deducted from the sales price of the property when it is sold to determine the profit or loss.
Beneficiary – The person(s) or organization(s) who receive(s) the benefits of trust property held under the terms of a trust.
Bequest - An old legal term meaning to give a gift or leave property under the terms of a will.
Bond - An insurance policy used to ensure a legal representative will do his job and not misuse or steal funds he is controlling. The bond guarantees that a certain amount of money will be paid if a party is injured due to acts of the legal representative.
By Right of Representation – Common terminology for the Latin term, Per Stirpes. This is the most common way of distributing an estate such that if one of the children is dead, his children share equally in his share of the estate distribution. This term is often summarized by the phrase, “if the parent is dead his children stand in his shoes.”
Charitable Remainder Trust – A trust used to make large donations of property or money to a charity so the person making the gift or donation can obtain a tax advantage. In a charitable remainder trust, the donor reserves the right to use the trust property during his life or some other specified time period, and when the agreed period is over the property goes to the charity.
Codicil - A written change or amendment to a will.
Community Property - Some state laws require that all assets acquired during a marriage belong equally to both spouses, except for gifts and inheritances given specifically to one spouse. The eight states with such laws are known as community property states. The eight states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington. Puerto Rico also uses the community property system, and Wisconsin has a modified community property system.
Complex Trust – See Accumulation Trust
Conservator – A person appointed to be legally responsible for the management of property and money belonging to a minor or incompetent person. The conservator may act as the guardian or the guardian may be a separate person and the conservator will just work with the guardian.
Conservatorship - A court controlled program where a conservator is appointed by the court to manage the monetary affairs of a person(s) who is unable to manage his/her own affairs.
Contract - An agreement between two or more parties. It may be oral, but generally it is written.
Creditor - A person or institution to whom money is owed.
Custodial Parent – The parent given custody and responsibility by the divorce court for the children of the divorced couple.
Decedent - The person who has died.
Death taxes – Taxes levied on the property of a deceased person. Federal death taxes are usually referred to as estate taxes. Local and state death taxes are often referred to as inheritance taxes, or simply death taxes.
Deed - A written document used to evidence ownership and/or transfer title to real estate.
Debtor – A person who owes money.
Devise - A legal term referring to real estate which passes through a will.
Disclaimer - The refusal of a beneficiary to accept property willed to him. When a disclaimer is made, the property is generally transferred to the person next in line under the will. A disclaimer is also called a renunciation.
Dispositive Provision - A clause in a will or trust that gives away property.
Disposition - The parting with or giving away of property.
Disinherit - Cutting a person off from his or her inheritance in an estate where he or she would have been a natural heir.
Doctrine of Independent Significance – The legal power to make reference in one document to an independent document that stands alone. By making reference to the independent document, the law will allow the independent document to be incorporated into the document making reference to it.
Domicile – The state or county which is the primary residence of a person.
Donee – A person who receives a gift.
Donor - A person who makes a gift.
Durable Power of Attorney – A document established by an individual (the principal) granting another person (the agent) the right and authority to handle the financial and other affairs of the principal. The Durable Power of Attorney survives through the period of incompetency of the principal.
Durable Power of Attorney for Health Care – A document established by an individual (the principal) granting another person (the agent) the right and authority to handle matters related to the health care of the principal.
Due-on-sale Clause – A clause in a mortgage document which requires that the mortgage be paid in full if the encumbered property is transferred.
Escheat - A legal word that describes the situation where property transfers to the ownership of the state government because there are no legal inheritors to claim it.
Estate - The aggregate of all assets and debts held (owned) by an individual during his or her life or at the time of his or her death.
Estate Taxes – Taxes imposed on the “privilege” of transferring property by reason of death. Estate tax is most commonly used in reference to the tax imposed by the Federal Government rather than the state government. Estate taxes are intended to raise revenue for the government and break up a family’s wealth, so that the nation’s wealth doesn’t concentrate in the hands of a few families.
Executor/ Executrix - The person (male/female) named in a will to manage a decedent’s estate. The more modern term is a “personal representative,” which removes any reference to the sex of the person.
Exemption Equivalent - When property is given as a gift or passed to heirs as part of an estate, it is subject to federal estate and gift tax laws. Each person is given a tax credit (the “unified credit”) that can be used to offset the tax assessed against a specific amount of property. The amount of property that results in a tax exactly equal to the unified credit is known as the “exemption equivalent” (see Appendix 1 for exemption equivalent values). Technically, no property is exempt from federal estate and gift taxes, but the term exemption equivalent is commonly used. Stated another way, the unified credit is equal to the amount of tax due on a gift or estate transfer of property that has a value equal to the exemption equivalent amount.
Family Trust – Another name for a living trust.
Fiduciary – A person with the legal duty to act primarily for another’s benefit in a position of trust, good faith, candor and responsibility. “Fiduciary” is often used as an alternative term for “trustee.”
Fiduciary Duty – The duty of a fiduciary to act in a position of trust, good faith, candor and responsibility, on behalf of another. The duty is one of the best defined responsibilities under the law and is very strictly enforced by the courts.
Fraud – The use of deception for unlawful gain.
General Power of Attorney – A legal document that, when properly executed, gives one person (the agent) full legal authority to act on behalf of another (the principal). The scope of the document can be as broad or narrow as you desire as defined in the document. A general power of attorney becomes invalid when the principal dies or becomes incompetent.
Gift - A transfer of property without receiving some benefit in return. The person making the transfer cannot be obligated in any way to make the transfer.
Gift Taxes – Taxes levied by the Federal Government on gifts. Gift taxes and estate taxes have been “merged” into a single tax called the “unified tax.”
Grantor - The person who establishes a trust and transfers assets into it. Other terms for the “grantor” include “trustor” and “settlor.”
Grantor Trust - A trust in which the person establishing the trust retains enough “ownership rights” or “incidents of ownership” that the person is treated by the IRS as the owner of the trust assets for tax purposes. The right to revoke the trust is sufficient to make the trust a grantor trust.
Gross Estate - The total value of an estate at the date of the decedent’s death. The value is determined before debts and other “deductions” are subtracted from the estate value.
Guarantor - A party who guarantees repayment of a loan, using their own assets if necessary.
Guardian – A person designated by court appointment and given the responsibility of managing the personal affairs of a minor child or a person that is legally incompetent to manage his or her own affairs.
Heir - A person who, by law, inherits property from a deceased relative who didn’t leave any type of will or trust which distributes his or her property after death. The term is more “loosely” used to refer to a person who receives property from a decedent through any means.
Heirloom - A personal possession that usually has a sentimental value which exceeds its monetary value.
Holographic Will - A do-it-yourself handwritten will. To be valid this will must be totally in your own handwriting, signed and dated. About 20 states allow holographic wills, but it is best to have a more formal will.
Homestead Laws - State laws which protect your house, clothing, and personal property, up to a specific dollar amount, from being taken away by most types of lawsuits or bankruptcies.
Household Items - The phrase in a will which indicates everything which may be used for the convenience of the house such as tables, chairs, bedding, etc. Apparel, books, weapons, and the like are not included.
Incapacitated - A person who is legally incapable of managing his or her own business affairs. A person may be permanently or temporarily incapacitated. A probate court usually decides if a person is incapacitated or not. “Incapacitated” is often used interchangeably with “incompetent.”
Incidents of Ownership - All or any management control over a trust or an insurance policy. In relation to an insurance policy, incidents of ownership include the right to change the beneficiaries, borrow cash value, and change the ownership, among other rights.
Income Tax - A tax assessed on gain made by an individual or entity.
Incompetent - A person who is legally incapable of managing his or her own business affairs. A person may be permanently or temporarily incompetent. A probate court usually decides if a person is incompetent or not. “Incompetent” is often used interchangeably with “incapacitated.”
Independent Trustee - A trustee who is unrelated to the person who establishes a trust (the grantor) and the beneficiaries of the trust. Unrelated attorneys, banks, corporations, etc., are usually chosen to act as independent trustees. The IRS requires a trust to have an independent trustee if the trust is to achieve certain estate tax and income tax benefits available to irrevocable trusts (not living trusts).
Inherit – To take or receive property by legal right from a deceased person.
Inheritance Tax - A tax imposed upon the transfer of property from a deceased person’s estate. “Inheritance Tax” is a term which is usually applied to the taxes charged by a state, where as the taxes imposed by the Federal Government are usually referred to as estate taxes.
Inter Vivos Revocable Trust - One name for a living trust. “Inter vivos” is Latin for “between the living.”
Intestate – To die without a will or other valid estate transfer devise.
Intestate Succession – The order of persons entitled to received property distributed by a state court when the deceased failed to write a will or trust, or the will or trust has failed to legally distribute the deceased person’s property.
Irrevocable Trust - A trust that cannot be changed, canceled, or “revoked” once it is set up. A “living trust” is not an example of an irrevocable trust. Insurance trusts and “Children’s Trusts,” or “2503 Trusts,” are examples of irrevocable trusts. Irrevocable trusts are treated by the IRS very differently than revocable trusts.
Insurance Trust – An irrevocable trust used to hold insurance and pass it on to your heirs without any estate taxes on the death benefits of the policy.
Issue – A legal term used in wills and trusts meaning one’s children, grandchildren, etc., either through birth or adoption.
Joint Ownership – The situation where two or more people own the same piece of property together. The property can be “owned” by the people as joint tenants, tenants in common, tenants by the entirety and other legally defined relationships.
Joint Tenancy – When two or more people take title to the same property and simultaneously each owns 100% of the property, or has full rights to the property. At the death of one joint tenant, his or her share immediately transfers to the ownership of the survivor(s).
Jurisdiction - The location where a person has access to the court system. The place where a person lives usually determines which court has the legal right to adjudicate his or her claims, probate proceedings, or other matters. The location of real property can also determine the “jurisdiction” of legal matters related to that property.
Letters Testamentary - A formal court order (document) issued by a probate judge giving the personal representative authority to conduct business, contract, sell estate property, pay bills, distribute estate property, and otherwise act on behalf of the estate.
Life Estate – The right to have all of the benefit from a property during one’s lifetime. The person with the right doesn’t own the property, and when he or she dies, the property is not included in his or her estate.
Life Insurance Trust - A type of irrevocable trust used to hold life insurance. When a life insurance policy is held in an insurance trust, it is protected from estate taxes when the insured dies; provided the trust is established properly, managed properly, and the insured does not retain any “incidents of ownership.”
Revocable Living Trust – See Living Trust
Living Trust – A type of revocable trust used in estate planning to avoid probate, help in situations of incompetency, and allow “smooth” management of assets after the death of the grantor or person who established the trust. The trust can be effective in eliminating or reducing estate taxes for married couples. Revocable Living trusts are established during the life of the grantor, who retains the right to the income and principal and the right to amend or revoke the trust. When the grantor dies, the trust becomes irrevocable and acts as a substitute for a traditional will.
Living Will - A document defining your “right to die.” It usually states that you do not want to have your life artificially prolonged by modern medical technologies. You can specifically define the means which you do not want used or do want used.
Lunch Theory of Justice – Lee’s theory concerning the way courts dispense justice, i.e., the outcome of a case depends on what the judge or jury ate for lunch. We don’t really believe that, because we have a deep respect for the jury system, but the outcome of some cases can’t be explained any other way.
Loving Trust - Another name for a living trust. The term “loving trust” was popularized in the 1980′s by a group selling living trusts.
Marital Deduction - The unlimited deduction allowed under federal estate tax law for all qualifying property passing from the estate of the deceased spouse to the surviving spouse. The value of the property passing to the surviving spouse under the marital deduction is “deducted” from the deceased spouse’s estate before federal estate taxes are calculated on the estate. Proper planning and use of the deduction allows more property to pass estate tax free to the family.
Marital Deduction Trust - The trust which “receives” the property passed under the marital deduction laws, from the deceased spouse’s estate to the surviving spouse. Property in the marital deduction trust will be included as part of the surviving spouse’s estate (for estate tax purposes) when he or she dies.
Minor - A child who is not old enough to have the legal capacity to govern his or her own affairs. Depending upon the specific state and the specific laws being applied, a minor is usually either under 21 years old or 18 years old.
Net Taxable Estate – The value of an estate upon which the federal estate tax is levied. The net taxable estate or “net value” is the total or “gross value” of the estate less liabilities, expenses and other deductions allowed by the tax laws.
Notice - The legally prescribed process of making someone aware of a legal proceeding or matter.
Notarized - The affirmation of an agent (the notary) of the state affirming that the signature on the document being “notarized” is in fact the signature of the person purportedly signing the document.
Notary - A person who has state granted authority to certify the validity or authenticity of the signature being made on a document.
Pay on Death Account – See POD Account.
Per Capita - A method of distributing an estate such that all of the surviving descendants share equally in the property. Also know as Pro Rata.
Per Stirpes – The most common way of distributing an estate such that if one of the children is dead, his or her children share equally in his or her share. Also know as By Right of Representation.
Perpetuities Savings Clause – A “safety net” clause included in most trusts, which automatically terminates the trust at the last possible moment to prevent any possible violation of trust law caused because the general terms of the trust did not properly provide for a termination of the trust as required by law. Under most state laws a trust must have a finite “life” and end prior to the time required by law.
Personal Letter – A letter directing the distribution of personal items. This letter is referenced in a person’s will and is recognized by the courts upon the death of the person making the will and letter.
Personal Property - Property other than real estate (land and permanent structures on the land). Cars, furniture, securities, bank accounts, and animals are examples of personal property.
Personal Representative – The “modern” term for the executor or executrix, who is the court appointed individual that probates the will and carries out the will’s instructions under court supervision.
POD Account - A bank account that is designed to avoid probate. It is a contract between the bank and the account holder guaranteeing that, upon the account holder’s death, the bank will pay the balance of the account to whomever is designated to receive the account.
Pour-over Trust – A trust designed to receive property that is “poured over” into it. The property is usually “poured over” or received from a pourover will through the probate process.
Pour-over Will - A will which contains a clause that transfers some or all of the assets that pass through the will into a trust for final distribution from the trust. The will’s assets are said to “pour over” into the trust.
Power of Appointment – The power given to a person, by appointment in a will or a trust, to distribute the property that passes through the will or trust at the discretion of the person appointed. Other than to give the appointed person the authority to make the distribution, the will or trust doesn’t make distribution of the property.
Power of Attorney - A document established by an individual (the principal) granting another person (the agent) the right and authority to handle the financial affairs for the principal. A power of attorney becomes invalid at the death or incompetency of the principal, unless the power of attorney is a “durable power of attorney” which remains in effect after the principal becomes incompetent.
Prenuptial Agreement – A contract between two potential marriage partners specifying how the property owned by each prior to marriage and owned individually or jointly during marriage will be divided should the couple divorce.
Primary Beneficiary - The person or persons for whose benefit a trust is originally established. When conditions change and the primary beneficiaries are no longer in a position to receive the benefit of the trust, the benefit goes to the “secondary beneficiaries.”
Probate – The legal process which facilitates the transfer of a deceased person’s property whether they leave a will or don’t leave any will. The court establishes the authenticity of the will (if any), appoints a personal representative or administrator, identifies heirs and creditors, directs payment of debts and taxes, and oversees distributions of the assets according to the will or state law in the absence of a will.
Probate Court - The part of the judicial system dedicated to handling probate matters which includes settlement of intestate and testate estates, adoptions, appointment of guardians, name changes, and other matters.
Probate Estate – A deceased person’s property which is subject to the probate process. Property held in a living trust is usually not considered part of the probate estate.
Probate Fees - The fees, often a percentage of the estate, paid to the attorney and others who handle the probate proceeding.
Proving a Will - The process of establishing the validity of a will before the probate court. (See Self Proving Will)
QTIP Trust – A Qualified Terminable Interest Trust (Q-Tip) is a type of trust which provides an unlimited marital deduction for qualified property put into the trust. However, rather than permitting the surviving spouse to have full power to distribute the property to anyone he or she wishes, the trust restricts the ability of the surviving spouse to distribute the property in the trust to a select group of individuals, such as the children, as agreed when both spouses were alive. Without the new QTIP laws, any attempt to “tie down” the property and restrict the surviving spouse’s rights to transfer the trust property would have resulted in the property not qualifying for the marital deduction tax benefit.
Quitclaim Deed - A document (a deed) that transfers a person’s interest in a piece of real estate, without the warranties or guarantees that are made in a warranty deed.
Revocable Trust - A trust which can be amended or revoked by the person(s) who established the trust.
Real Property - Land and attachments to the land, such as buildings, fences, etc.
Right to Die – The right to decide not to have life prolonged by extraordinary, artificial means.
Rule Against Perpetuities – A rule of law limiting the duration of a trust. Some trusts can go on in perpetuity (forever), but most types of trusts have a maximum duration or life established by law.
Section 2053 Trusts – A type of irrevocable trust, authorized by section 2503 of the IRS code, often established for children. Section 2503 allows annual gifts up to $10,000 to be made to the trust, rather than directly to the child, and still have the gift qualify for the $10,000 annual gift tax exclusion.
Self Proving Will - A will which has been properly witnessed (by either two or three witnesses depending on state laws) and the witnesses have signed an affidavit before a notary public stating that all of the proper formalities of the will’s execution have been complied with. This usually makes it very easy for the court to “prove” the will.
Separate Property - In community property states, all property which is not held commonly by a married couple is considered separate property. In general, it is property owned by one spouse in which the other spouse does not own an interest.
Settlor - A person who establishes a trust. The term settlor is used interchangeably with the terms “trustor” and “grantor.”
Simple Trust - Trusts that are established with terms that require the trust to “pay” all of its income out, so that it does not accumulate income on which income taxes would have to be paid.
Spendthrift - An individual who cannot handle money wisely and spends it wastefully.
Split Gift - Each spouse is entitled to give any individual $10,000 in a calendar year and, provided it is given properly, there is no tax consequence to the giver or receiver according to the “annual exclusion” laws. However, if a married couple tries to give more than $10,000 to an individual, they must file a gift tax form declaring that the gift is split between them. If the form is not filed, the IRS cannot determine who gave the gift or gifts, and one member of the couple may be allocated the entire gift amount. Thus, he or she would actually owe a gift tax because his or her gift was over $10,000.
Springing Power – A power to act on the occurrence of some certain criteria, such as an illness or incompetency. The power is said to spring into existence upon the occurrence of the event. The agent’s power to act for the principal under a durable power of attorney is usually a springing power.
Sprinkle or Sprinkling Power – The power given a trustee to decide how, when and why to distribute trust income to the trust’s different beneficiaries. The sprinkling power allows the trustee to “sprinkle” the trust’s income over the beneficiaries. It is a valuable power to give the trustee in irrevocable trusts because is allows the trustee to distribute income to the beneficiaries who will pay the smallest amount of income tax on the distribution.
Sprinkling Trust – A trust that grants the trustee a sprinkling power which allows the trustee to decide how, when and why to distribute the trust income among the trust’s beneficiaries.
Spouse – Legal term for husband or wife.
Stepped-up Basis – The new basis established for a property after the property has been evaluated and taxed as part of an estate. The new basis or “stepped-up basis” is the value of the property used to assess the estate tax.
Successor Trustee - The trustee who takes over when the initial trustee can no longer function.
Surviving Spouse – The husband or wife that lives after the death of his or her spouse.
Taxable Estate – The portion of an estate that is subject to federal estate taxes or state death taxes. Technically, all of an estate is subject to federal estate taxes, but because of the unified credit, only estates with a value over the exemption equivalent amount actually have to pay any estate taxes (see Appendix 1). Therefore, it is common to refer to an estate with a value over the exemption equivalent amount as a taxable estate and an estate with a value under the exemption equivalent amount as a nontaxable estate.
Tenants by the Entirety – A way of owning property which, for almost all practical purposes, is the same as joint tenants. Tenancies by the entirety are creations of state law and are used only between husbands and wives, whereas joint tenancies can be used by anyone, not just by husbands and wives, who wants to own property jointly.
Tenants in Common - A way of owning property in which two or more owners all “share” ownership of the property. The owners can own various percentages of the whole property, unlike joint tenants which each own an equal share. When one owner dies, his or her share does not “automatically” go to the other owner(s), because tenancies in common do not have a survivorship provision like joint tenancies.
Testamentary Trust – A trust created by a will.
Testate - One who dies leaving a will.
Title – Document proving ownership of property.
Totten Trust – A bank account that is designed to get around probate. The account is created by a person in his or her own name as the trustee for another person. It is a type of revocable trust until the creator dies, then it is paid out to the designated beneficiary(ies).
Trust - A legal document in which property is held and managed by a trustee for the benefit of another known as a beneficiary. A trust is a relationship in which property is held by one person for the benefit of another. The trust can be created verbally, but will most often be in writing.
Trust Certificate - A summary of the trust’s terms prepared by an attorney that evidences the trust exists.
Trust Corpus or Res – The property of a trust.
Trustee – The person or institution that manages the trust property under the terms of the trust.
Trustor - A person who establishes a trust. The term trustor is used interchangeably with the terms “settlor” and “grantor.”
Unified Credit – A tax credit is given to each person by the IRS to be used during his or her life or after his or her death. The tax credit equals the amount of tax (gift or estate) which is assessed on the exemption equivalent value of property. It is considered the “unified” credit because it applies to both gift taxes and estate taxes and results from the IRS’s effort to unify these two taxes or make them consistent. It is often thought that the total value of taxed gifts and estate transfers can equal the exemption equivalent before any tax is assessed. This thought is wrong because a tax is actually assessed on the first dollar of taxable gift or estate property. Note: Some property gifted is not exposed to the unified tax; for example, gifts that qualify for the annual gift tax exclusion. Some property transferred in an estate is not exposed to the unified tax, such as property which goes to a spouse and qualifies for the unlimited marital deduction. Although a tax is assessed on gifts valued over the annual exclusion amount and on all the estate assets the individual doesn’t actually pay the tax on amounts up to the exemption equivalent maximum because the unified credit is applied against the tax.
Uniform Gift to Minors Act - A series of state statutes that provides a method for transferring property by gift to minors who cannot legally manage the property for themselves. The laws allow an adult to manage the property and yet not have it owned by the adult.
Uniform Probate Code - A standardized code designed by the American Law Institute to streamline the probate process. Many states have not adopted the code as part of their laws.
Unlimited Marital Deduction - The tax law that allows a person to give an unlimited value of property as a gift, or leave an estate of unlimited value to his or her spouse without a gift or estate tax being assessed.
Warranty Deed – A deed which warrants that certain contracts will “run” (continue) with your property.
Will – A legal document stating the intentions of a deceased person concerning the distribution of his or her property, and management of his or her affairs following his or her death. State law dictates the legality of a will.
The obvious problem with the methods of appraised values of homes and/or the comparative market analysis (CMA) used by Agents & Realtors to try to speculate on a value of a home is causing many home buyers to walk away and home sellers to suffer even more loss. Reported in the Wall Street Journal, “asking prices are often out of whack with values that are later determined by appraisals.”1 The real problem is that Appraisers, Agents and/or Realtors do not deal in the reality of what each property is worth and at best can only speculate. Attempting to measure and speculate on a value of a home or property nearby that is similar that sold in the past six months in the same or similar neighborhood to try to determine a price is not fair to the sellers or the buyers. Even if an Appraiser, Agent and/or Realtor try to use older sales going back several years they still are not able to find relevant numbers. All markets are always in fluctuation and each and every home or any property, developed or undeveloped land is unique and has its own features and benefits and liabilities and should speak for itself and not by what another has sold for in the past, present or future – no matter how what similarities exist. The method of guessing by Appraisers and Realtors and/or Agents are not just limited to residential , commercial or undeveloped land but when it involves luxury properties it becomes even worse. Matters used to speculate like, services and amenities in neighborhoods, school district funding, police and fire services make any quantifiable data with relevant numbers for guessing a value next to impossible. So what is the practical result of the guessing system used by Appraisers, Realtors and Agents? The process leads more often than not to an appraisal amount that is much higher than the private treaty sale (negotiated sale) agreed upon price between the seller and the buyer. A study was conducted that “confirms what many of us have thought but heretofore have only known anecdotally: That appraisals are not very accurate.”1and “that “a wide discrepancy between the appraisal values and the eventual sales prices of the properties.”2 Statistics from the study revealed that 64% of real estate was appraised at a value that was higher than the sale price and only 35% appraised less than the actual sale price.3 This study also revealed that “at the extremes, in 121 instances, the appraised value was more than double the sale price, and in 132 examples, the appraisal was less than 70 percent of the sale price.”4 So what if the appraisals are only a speculation at best about a value of real estate? Appraisals are what banks have been conditioned to think is an “accurate” way to find a value to real estate. An attorney at a law firm said, “Appraisals are important in nearly every aspect of a real estate deal, whether it is originating a loan, working out a loan, the decision to buy or sell a property and even bankruptcy.”5 What practically happens as a result of appraisals? The result has an effect upon everyone involved with the process of selling the real estate. The appraisal affects the result of what lenders offer to loan. A low appraisal results in a smaller amount for a mortgage on a property and a higher rate. What if the appraisal results in a value less than the “list” list price? When this happens someone is left with making up the difference. Either the buyer has to make a larger deposit for the mortgage or the buyer refuses to pay more than the appraised amount. This huge gap between the appraised price and what the seller wants and what the buyer is willing to pay has made many private treaty (negotiated sales) go South fast. According to the National Association of Realtors (NAR) survey of over 3000 Agents, on average, one-third of real-estate agents said the appraisal process resulted in buyers and sellers delaying or canceling contracts or renegotiating to a lower sales price last year.6 According to the Wall Street Journal, going forward, experts say that one third of contracts being cancelled will increase.7 What if the loan amount is more than the value of the home by 80%? The buyer will have to put more money down. So what is the alternative to appraisals and their method of real estate valuation and sales (private treaty – negotiated sales)? The problem is that both can at best ever only speculate on a value and price for a home or property. Is there a method of selling that only deals in the reality of what property is worth? How can anyone actually know what is the true market value of a home or property? The answer is the auction method of selling. The auction method is the only method of selling where true and fair market value is found that is based in reality, without any speculation. Fact is that every home and property is different and the guessing method of finding a similar home or property that sold is to use to try to measure the other is a disservice to all parties involved. So practically what is the best way for Real Estate Sellers, Buyers and Banks to come to terms in what that is fairly? An auction provides the very best way for all parties to be treated fair. The seller finds out what is fair when buyers compete to buy the home and the price is discovered at auction where all the serious buyers come together and bid. The buyer prior to the auction can go and find out what they pre-qualify for with a loan for the real estate so they know their limit when it comes to biding at the auction. The banks can offer lower rates because they know that the real estate sold for the reality of what it is really worth. Auctions also eliminate all the contingencies that are part of the traditional sales methods with Agents & Realtors because when the hammer falls the property is actually sold. It is not contingent upon appraisal, fixing this, repairing that, upgrading or the next thing. The real estate actually is sold. Will you continue to not face the reality of what real estate is worth? Will you depend upon antiquated methods that are nothing more than only a speculation at best? If you have a property and want to sell it for what it is really worth and not settle for one cent less than contact us to schedule an auction. If you are a buyer and want to not pay more than what a home is really worth, then find an auction to buy your home or property. If you are a loan officer you will only have to find what a person is eligible to borrow instead of taking the risk and the speculation of an appraisal. 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According to a study conducted by Harris Interactive some 83% of people believe that auctions are a way to find good deals. Those with a home for sale or other property for sale need to seriously consider the benefits of selling at auction. Homes for sale can take months or even years to sell. Those with a house to sell often put out all sorts of money into repairs and updates. Buying a house can be just as frustrating with the owner turning down bid after bid. However, with an auction and an auctioneer there is no need for constantly searching for homes for sale. Buyers don’t have to go through a property search. Instead, they search the auction listings on websites like Real Estate Auction MLS to find homes for sale or other available real estate. At auction, a buyer doesn’t have to go through exhausting negotiations to get that desired home for sale. All a buyer has to do is to make the best bid. The person offering the most amount purchases the property for sale on the spot. The seller of the house for sale benefits by the immediate turn around on the real estate. The seller doesn’t have to put up with strangers continually traipsing through the house for sale and prolonging the process of offering real estate for sale. Auctions allow the seller to set the time and place of the sale. There is no confusion as to when the auctioneer will do his job or when those interested in buying a house will be on hand. An Agent and/or Realtor searching for a property isn’t necessary. Those who wish to buy a house simply contact the auctioneer for a tour of the home, schedule a home inspection if they want and show up at the time and place listed for the real estate for sale. It takes a long time with the services of a real estate agent to let the public know they may buy a house. Because it is a contingent sale (conditions placed by the buyer – fix this, repair that, reduce for the next thing, bank financing, etc.) and because the seller makes the initial offer of a price, the only thing a seller can count on is the price being negotiated down. However, when property is sold at auction, the auctioneer, wants as many qualified buyers as possible to attend and only qualified buyers can participate. Auctioneers do extensive marketing to the targeted buyer(s). Because the seller knows that their property will sell in the present condition (as is) and is not contingent upon financing it eliminates the unqualified buyers from participating at the auction. This saves the seller money, time and effort. The seller can plan and move on with their life knowing when their property will be sold and that it will be to the highest bidder at a price that is based upon the reality of what it is worth. Other benefits include the seller not needing to invest in repairs or upgrades. Everyone has different tastes and a new owner can make it their home by renovating as they would like and not according to what an Agent and/or Realtor wanting to double as an interior decorator, landscape architect or home renovation expert thinks it should be to get the home sold. Auction companies and auctioneers are to specialize in getting the most exposure possible and top dollar for their client and if they have marketed the property properly and at the end of the day when the property is sold and changes hands in this simple transaction, it will be at a price that is both fair to the seller and to the buyer. Receive the most prominent wordpress plugin offered today, you'll find both free and exceptional plugins listed here. We have actually inspected the whole internet, reviewed hundreds of suggested Wordpress plugins and decided on the most effective. 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Ever wonder what’s the most unbiased way for buyers and sellers to interact where both can engage each other without completely exposing their bottom line? Is it with the list, wait, and continuously reduce method of traditional selling by agent/realtor? How does the seller know they really received the most a person is willing to pay with this method of selling? Fact is they don’t, because with selling by private treaty with an agent/realtor there are always contingencies and it is never time definite. What does that mean? Contingencies – The private treaty method of selling puts the buyer in control of the sale where they are able to dictate to the seller what they want fixed, replaced or anything they are able to negotiate in the sale to get what they want. Time Indefinite – The sellers never know when their real estate will be sold. Sure an agent and/or realtor may have a contract and they are usually six months long or up to a year and sometimes even longer. Can the seller of a home afford to be at the mercy of a prospective buyer who can dictate when they will buy the home, what contingencies they demand and the price they are willing to pay? Can sellers really afford to wait today to have a home sold? What about the price? What is too much to ask? What happens if it is not enough? How can they tell either way? Fact is they really can’t. The auction method is the only method of selling where an equitable opportunity for both sellers and buyers to come together and discover what the market is willing to bear upon the real estate being sold. With the auction method of selling, buyers are able to set a reserve price and/or a minimum they wish to receive for their real estate. At many auctions I often have bidders ask, “What is the reserve price for the real estate?” I politely ask them, “What is the most you are willing to pay?” Most then realize that it would not be fair for me to tell them what the seller is willing to take or for me to start the bidding at their highest bid. At the auction we provide the equitable opportunity for the sellers and buyers to engage each other when we call for bids. Sometimes the price is more than what the seller has expressed they wanted and sometimes it is less! The bottom line is that it is the reality of what the real estate is worth. This is called “true market value.” With the auction method the sellers don’t forfeit the most their real estate could possibly be sold because they have not put a price on it by making the initial offer to the public. With the auction method the buyers don’t forfeit more than what the market will bear by making a counter offer that may be too high. The auction method is time definite and both buyers and sellers can plan to move forward with their respective lives by knowing when their real estate will be sold and/or purchased. Do you want to receive the most money possible for your real estate? Do you want to pay the least amount possible for real estate? You know now where both come together in the most fair and free market method of engaging each other – at auction. Contact us today and let us help make certain your hope by faith through grace today. Get the most popular Free SEOPressor equivalent offered today, you'll locate both free and premium plugins here. We have checked the whole internet, examined hundreds of recommended Wordpress plugins and picked the best. Get new products the latest innovation updates, including new product launches, revenues figures and tech business performance info. Go through articles on brand-new gadgets and prototypes for future innovation. wordpress seo tips that you ought to and need to not be doing on your Web pages to make them place greater in online search engine. In a continuously transforming SEO landscape, it is essential to continue to be up-to-date with the altering methods and strategies of optimization. The best website for purevpn review, headlines and tips. It supplies you solutions, components and choices that no various other site will certainly supply you. Do remember to visit our website every so often due to the fact that we will be continually updated and show you the incredible VPN offers that you might be considering. Which VPN company supplies the best Premium VPN accounts available? The only individual Best VPN Reviews site examinations and reviews all premium VPN services. SEO Software application for all your Search Engine Optimization & PPC Management requires. for both on and off page analysis and also spying on your rivals. Traffic Travis Cracked allows you to name a few things to do a key phrase analysis, a competitor study and an on-page analysis. It additionally has an attributes that allows you to do rank tracking on a number of key words. They do also have a professional version, yet you don't require that to begin with.
In a time within the land when we witness the economic downturn I find it surprising to hear some auctioneers boasting of not charging a buyer’s premium. Auctioneers are supposed to be working for the seller but some may have been in the business so long that they lose sight of this and are more concerned about pleasing the customers (buyers) more than their clients (consignors). Maybe some auctioneers have gotten to the point that they have so much business that they are only concerned about the customers and not their clients. If so, shame on them! Auctioneers who don’t use a buyer’s premium are telling their clients that they should pay for everything – the commission, labor and advertising and every possible related expense to conducting an auction. Some Auctioneers are charging upwards of 35% PLUS advertising, labor and associated expenses. What does this leave a seller with at the end of the day? You are right, not much! Product drives the sale. Product is what the customers/buyers consume. The product will determine the price regardless of what it is because auctions deal in the reality of what anything is worth. Many people are skeptical and shy away of letting much personal property be sold at auction because of the loss they could suffer. A buyer’s premium helps alleviate the seller of their fears of greater loss by letting the person who benefits the most from it – the buyer. If you are the seller would you rather receive only sixty-five cents of every dollar less the advertising and associated costs or would you rather receive eighty-five cents of every dollar? The math is not hard to figure out. Buyers who want the product will pay true market value and bid accordingly with a buyer’s premium. Many prominent auction companies use very high buyer’s premiums with some reaching upwards of 20+% You see the television shows on auctions. Even the popular Auction Kings at their auction house in GA use a 15% buyer’s premium. A buyer’s premium is fair and balanced between both clients/sellers and customers/buyers. Clients are more willing to let product go to auction knowing that they will not suffer as great a loss. I recently heard of an auctioneer boasting about how they will never use a buyer’s premium and finding every opportunity to try to belittle the buyer’s premium at an auction they conducted for a government entity. Why? Because the personal aspect of the sale is removed and there is little accountability since it is not personal assets they are selling. These auctioneers were obviously full of themselves and were really demonstrating that they have lost touch and have disregard for those whom they should treat with the utmost respect and gratitude – the seller/consignor, for without them, they would not be having the auction… Anyone would know that it would be really insulting to talk this way in front of a family who has entrusted you to be looking out for their economic best interests for an estate or business. One thing you can have the assurance of is that these auctioneers who boast in this manner have been in the business either way too long or not long enough to understand how they have lost touch with whom they are working and are ethically and morally obligated to advocate and represent. Obtain the most well-liked SEOPressor free readily available today, you'll locate both free and exceptional plugins below. We have checked the whole web, assessed hundreds of recommended Wordpress plugins and picked the very best. Locate breaking news the most recent modern technology headlines, featuring brand-new item launches, sales figures and tech market efficiency info. Go through write-ups on new gadgets and prototypes for future innovation. seo optimization tips that you must and should not be doing on your Web pages to make them rate greater in search engines. In a continuously altering SEO garden, it is important to stay current with the changing methods and techniques of optimization. The best site for strongvpn review, information and pointers. It provides you solutions, functions and alternatives that no various other website will offer you. Do keep in mind to see our website every now and then because we will be consistently upgraded and show you the outstanding VPN provides that you could be thinking about. Which VPN carrier supplies the most effective Premium VPN accounts in the market? The only individual Ideal VPN Reviews website examinations and reviews all superior VPN services. SEO Software application for all your Search Engine Optimization & PPC Management requires. for both on and off web page analysis in addition to spying on your rivals. Traffic Travis Unleashed enables you among other things to do a key words analysis, a competitor evaluation and an on-page study. It likewise has a functions that permits you to do rank monitoring on numerous keywords. They do additionally have an expert version, but you don't need that to start with.
Stewardship is not often thought of by many in business today – or should I say that it is when it comes to the business owner’s interests and not their client’s. Auctioneers are the fiduciary of their clients and are morally and ethically to always do what is in their client’s best interest. That is supposed to be… This includes everything from protecting from damages & theft, to the prices realized at auction, to the marketing of the items to be sold, and labor to conduct the auction. The marketing of an auction is one of the most important aspects of the auction. Effective marketing is essential for success. If only a few people know about the auction then only a few people will show up for the sale. Less competition for the items sold will result in a lower return for the client. There are some auctioneers who market effectively and efficiently and others who do not. Some things to consider when interviewing an auctioneer about the marketing is the auctioneer also making money from you with the advertising? Some auctioneers offer “advertising packages” where a person can pick and choose from the auctioneers list of ways to market. What the client doesn’t know is the auctioneer is making money from each package. The client pays not only the price from the advertising vendor but also a price for the auctioneer creating the ad and submitting the ads for publication. Another thing you want to consider is, does the auctioneer know what advertising even works and what advertising is not effective? There are many auctioneers who take a “shotgun” approach and spend lots of money on every type of print media available. To these auctioneers it doesn’t matter if the media they publish in actually works or not. They figure it is their client’s money and it gets their name out there so they see it as a way to market their business at their client’s expense. How can you know if an auctioneer actually cares about his client? You will know if you go to an auction and before you get a bid card they ask you, “How did you find out about the auction?” Auctioneers who actually track this information know what advertising works and what does not. Auctioneers are to give copies of receipts of everything to their client. This would include each and every advertising vendor they use. Each and every cost for the production of the auction must be accounted for by statue or the auctioneer could be brought up on charges and lose his license. Print media is a dying industry and has been for years. Costs of publication are rising, rates keep increasing, and subscriptions keep going down! Just today (19 October 2012) in the Wall Street Journal was the article about Newsweek after 79 years of being in print will only be a digital publication in 2013. ( Read Article | View Video | Slide Show | Stock Quotes ) What does this have to do with auctioneers? Next time you see lots of ads scattered about in all types of print media you may want to ask yourself does this auctioneer care about saving his client money or does he care more about spreading his name anywhere he is able at the client’s expense? Many auctioneers still don’t get it and this is why you see them spending their client’s money. At True Blue Auctions, by His grace, we are “True Blue” to our clients which means that we are good stewards of our client’s marketing costs. We know that digital is the future and that is why you will always see the most robust website able to be built, as well as the latest marketing methods used for our clients. If there is any print media used it is because we know from years of tracking everyone who comes to our auctions just what advertising works and what does not. In fact, every auction we have ever conducted has tracked every bidder as to how they found out about the auction. We have done some very high profile auctions for distinguished celebrities where we auctioned their mansion, automobiles and all the contents of their homes and used zero print media. One was a three time Super Bowl player and at his auction there was not even standing room available. Over 200 people attended and it was in February we had just had 18 inches of snow and had to have the place “plowed out” for people to attend. I was told by several of our auctioneers, “Skip, you must get something in the paper.” I said, “With the advertising rates they have and what little space they give you? No way!” Now did I care about my client? Absolutely! Enough to make sure I was not about to waste his money on what I knew did not work. His auctions were a huge success and he was very pleased with how we did all we could to save costs and make him the most money possible. Never be afraid to ask the hard questions to an auctioneer. They are to be doing what is right by YOU, the client. I hope this article gives you some insight into how you can know if an auctioneer is being a good steward of his client’s best interests. If you have any questions, always feel free to reach out to us from our website, www.TrueBlueAuctions.com and let us make certain your hope by faith through grace today. Acquire the most well-liked download wordpress plugin readily available today, you'll find both free and superior plugins right here. We have checked the whole internet, examined hundreds of suggested Wordpress plugins and picked the very best. Discover technology industry the latest innovation updates, featuring brand-new product releases, revenues figures and tech sector efficiency details. Read guides on brand-new gizmos and prototypes for future innovation. local seo people need to and ought to not be doing on your Web pages to make them rank higher in search engines. In a continuously transforming SEO garden, it is important to remain updated with the transforming techniques and techniques of optimization. The very best site for free vpn 2013, updates and tips. It provides you services, attributes and options that no various other website will certainly supply you. Do remember to see our site every once in a while due to the fact that we will be continuously updated and reveal you the incredible VPN offers that you could be considering. Which VPN carrier supplies the very best Premium VPN accounts available? The only individual Ideal VPN Reviews site tests and reviews all superior VPN solutions. Search Engine Optimization Software application for all your SEO & PPC Management requires. for both on and off web page study and also spying on your rivals. Traffic Travis Unleashed permits you to name a few points to do a key words research, a rival evaluation and an on-page study. 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