Friday, April 24, 2009

119-TNG Radio - Susie Leivas 4-25-09

Bruce Norris is joined this week by Chief Financial Officer with Leivas and Associates, Susie Leivas.

Susie started working in the tax field at 13 years of age. Susie goes into a little detail of the family business and how she got started in the industry. Leivas and Associates does tax returns for individuals, corporations and trusts. Susie sees more audits comings as the State is more cash tight. Susie as an enrolled agent can represent clients during audits.

An Enrolled Agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals.

The IRS is getting tough as to who they will work with. If you’re not an attorney, enrolled agent, or CPA they won’t want to speak with you. There are different types of audits. Susie describes how the IRS is tracking how many returns the business and she personally accomplishes in a season. Every year the IRS could be looking for different things as red flags.

Bruce asks if a tax preparer pushes the envelope if the IRS could audit their entire clientele. Susie says she does know of cases where that has occurred so it’s important you have a person who knows what they are doing. Susie describes red flags for the IRS including negative taxable income, extremely high business expenses, and anything really out of ratio. The IRS uses computers and then people to check for inconsistencies. A CPT 2000 does not mean a person is being audited.

Bruce asks if there was any significant change this year to policy. Susie says no big stuff but the stimulus bill has changed some things including college credits and automobile purchases. Some got passed during tax season.

Bruce asks how this year has affected her clients. Susie says it’s been a depressing year. People are getting laid off, furloughs, pay cuts, and overtime has been cut. She thinks most Americans are a paycheck away from bankruptcy and we’ve learned to spend too much. She says this year was a very different year than last year.

Bruce asks how this cycle feels compares to the 90s and Susie says this year feels worse. In the 90s, Susie heard issues from mainly businesses. Individuals are really concerned and don’t see an end in sight.

Susie says people 60 and over know how to save money. People who are younger really don’t understand savings and it’s a real issue. Bruce says people confuse home equity with a savings account. Susie says real estate was seen as a check book and that she’s very surprised at how much people had started to pull out of houses.

Susie says people don’t look at the full picture when making purchase decisions. They seem to mostly care about the payment, not about terms. Susie saw many people become second homeowners and almost 100% were financed. Very few people own anything free and clear. Many people are retiring now with major debt. The old way of thinking was to get rid of all debt and then retire. Social Security was meant to be a supplement and around 70% rely on Social Security as their only form of retirement.

Susie says she was expecting the foreclosures to hit sooner and so far her clients haven’t gotten hit so hard. Part of her job is to pick people up so she’s been preparing herself for those conversations. She was ready last season. She got a little this year but not as much as she expected.

Susie says if people have yet to pay their taxes, they need to as soon as possible. Once you file, the IRS is willing to do payment arrangements and it’s really easy. If it’s really bad, she thinks the IRS will probably compromise and negotiate considering the current climate. The ability to pay will probably be more of an issue.

Susie and Bruce talk about people who don’t file for years and the process of going about getting into the system. Susie says the state is more aggressive in going after late payments. Bankruptcies can wipe out debt but it depends. Not all debt is forgivable. Bruce asks about insolvency and how that plays into the IRS.

Susie says Congress made some changes to help homeowners with acquisition debt. The state didn’t do the same. Susie says the every year the amount a senior can make before being taxed changes.

Susie and her team can be reached from their website at leivasandassociates.com. She will join us next week for part two.

In 1990 Susie became enrolled to practice before the Internal Revenue Service and in 2003 became a financial advisor for HD Vest.

Susie’s greatest strength is helping clients understand and feel comfortable with one of life’s ongoing large bills...TAXES. Many people say before meeting Susie going to have their taxes prepared was worse than going to the dentist. Susie helps make the best of one of life’s tough chores.

Susie’s father Richard Leivas started her in the business at the age of thirteen. After completing her education, she and her father became business partners in Leivas Tax & Bookkeeping Service with two locations in Riverside and San Bernardino. In 1992 Leivas Tax and Norton’s Business Service merged, with Leivas acquiring Norton in 1997. Over her career she has demonstrated to clients the tax benefit of retirement planning. After many years of working closely with Jim Kanouse, it made sense to join forces and form Leivas, Kanouse & Associates. Susie was married for the first time in 1999 and spends much of her free time with her husband Bob and her dog Buster in Lake Havasu City. They enjoy the outdoors, boating, and reading, listening to music and spending time with friends.

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Friday, April 17, 2009

118-TNG Radio - Tommy Williams 4-18-09

Bruce Norris is joined once again by past President and current Chairman of the Board for the National Auctioneers Association and co-founder of Williams and Williams Auctions, Tommy Williams.

Bruce starts by asking if there is a different process in selling real estate and cattle. Tommy says there is a slight difference but he’s hoping the audience will still understand. He says cattle auction goes a little faster and is a little more entertaining.

Auto auctions generate close to 50% of the proceeds for auctions. The end buyers are typically dealers. There are both dealer and public auctions but some are only available to dealers.

July 13-18th is an auction reunion in Kansas and Bruce asks who attends. Tommy says over 1,000 auctioneers will attend and bring families. It is the best and main time of year to attend education for the auction industry. Over 60 seminars will be available.

Bruce asks about Tommy’s family history in the auctions business. Tommy says there was a little family history but he fell into it on his own. Tommy’s son Dean is an attorney and didn’t plan to be in the auction industry. Tommy moved the business from Illinois to Oklahoma and Dean visited while in school and ended up later partnering. Tommy says he has six grandkids and he thinks a few might be interested in the business.

Bruce talks about the model Williams and Williams has chosen and how it is different from other auction houses. Tommy says online auctions are a very viable way to sell items and Williams and Williams does conduct online auctions. However, Tommy says a property will earn 10% more on the lawn then it will bring online or in a ballroom setting. It’s significant and matters. There is more expense in having these types of auctions.

Tommy describes the difference between absolute and seller reserve auctions. Tommy says the absolute auction is by far the best and motivates the buyer to the ultimate level of bidding. It also attracts the most attendance which is key for the best price. Tommy says many can’t stomach absolute so more are sold with reserve.

Tommy says it not impossible for very experienced auctioneers make mistakes. It’s complicated and not as easy it may look. Advertising has definitely changed over the years. The newspaper has dropped in value each and every day and online advertising has gotten more important. The auction companies track the marketing process very carefully to see where most people are seeing the information.

Tommy says when the word “sold” is uttered, in an absolute auction, it is the most binding contract you can enter into. It is different in a seller reserve. Bruce talks about dealing with deposits in real estate now and how difficult closing can become. Tommy says he thinks 10% down should be at stake to make sure the buyers are truly qualified. Tommy says he doesn’t like the current way real estate is sold because of these issues as buyers can tie up your property will no ramifications if they don’t come through.

Tommy describes how the auction business is commissioned. Williams and Williams gets commissioned directly from the seller. Some lenders require, however, a buyer’s premium. Many more auctions are charging buyers but Tommy actually likes charging the seller. He thinks the buyers see the auction in a more positive light and the premium isn’t seen as a tax on their purchase.

Bruce asks about Tommy dealing with lower priced areas. Tommy says there are minimum fees that must be charged. There does become a point where auctions can’t sell a property because it doesn’t cover the fees.

Bruce talks about lenders not foreclosing on properties because there is more owned on the property then it is worth so lenders don’t do anything with it. Tommy says this issue is really serious and most people aren’t hearing about. Tommy says he’s seen some neighborhoods where 80% of the neighborhood is vacant. There’s almost no choice but to tear them down as they become magnets for vandalism, squatters, and drug labs. Bruce says it doesn’t even have to be an old areas and Tommy sounds surprised. Tommy says that’s why these homes have to be given occupants whether they are investors or owner occupants. Empty properties are not good for neighborhoods.

Bruce talks about Orange County and the FDIC leasing space to set up shop to deal with assets. He asks if Tommy has heard of that and if Williams and Williams were involved in the RTC situation. Tommy says they were slightly involved with the RTC but dealing with government is difficult. Tommy had not heard of the offices being rented in Orange County. Tommy is worried the FDIC will warehouse the properties and it will make the problem worse.

Bruce brings up a new term he saw on the Williams and Williams website called “auction referral cooperative.” Tommy says this is a way to establish a network of like-minded auctioneers that refer one another. There’s no financial obligation and they are simply looking for other auctioneers of the same mind and there’s a referral fee involved.

Thank you Tommy as always for joining us on the show. We look forward to seeing you again this year on September 11th, 2009 for I Survived Real Estate 2009. See more on Williams and Williams at Williamsauction.com.

Tommy served as President of the National Auctioneers Association in 2008 and is current Chairman of the Board. Tommy also graciously took part in I Survived Real Estate 2008 last year.

Thomas L. Williams is a graduate of Penn State University (B.S. Animal Science) and the Certified Auctioneers Institute (CAI). Representing the third generation of Williams family auctioneers dating back to the mid-1800s, Williams is also a graduate of the historic Reppert School of Auctioneering. He has over 40 years experience in real estate auctions, land development and real estate investment. He currently serves as President of the National Auctioneers Association.

A founding partner of Williams & Williams, Williams served as president from 1986-2000, and became board chairman in 2001. He also co-founded and served as managing partner of Lowderman & Williams Auctioneers from 1965-85. He has conducted over 10,000 auctions in all 48 of the contiguous United States and Canada, and is an advisor to auctions conducted throughout Western Europe, South Africa, Australia and New Zealand.

An avid cattleman, Williams also owned and operated Bradmar Angus Farms from 1965-85, after which he continued to serve as a herd and genetics consultant for many of the nation's premier Angus cattle breeders.

Williams is a licensed auctioneer and real estate broker in over 20 states, and an active member of the National Association of Realtors.

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Friday, April 10, 2009

117-TNG Radio - Tommy Williams 4-11-09

Bruce Norris is joined this week by past President and current Chairman of the Board for the National Auctioneers Association and co-founder of Williams and Williams Auctions, Tommy Williams.

Bruce starts the interview by asking what auction companies miss out on when they aren’t members of the National Auctioneers Association. Tommy says non members miss out of networking, best practices, and education which furthers their professional endeavors. April 18th is national auction day and Tommy would like auctioneers to make communities aware of the benefit that auctions bring to the community. Auctions have the huge benefit of establishing market value on a certain day for numerous products and assets. They also might highlight their charity work in the community through charity auctions. Tommy feels the media picks up too much negative information about auctions and doesn’t highlight all the positives.

Bruce says he read that auctions raise as much money for charities that is sold in real estate and Tommy says that is true. Tommy says auctioneers bring a very important piece of expertise to nonprofit organizations.

Bruce asks if Realtors view auctions as competitors or partners and Tommy thinks too many see auctions as competitors. Tommy says there is fear that auctions establish market value and sometimes people don’t want to really know that actual value. The real estate community wants to not take the hit. Bruce says he’s baulked at final bids before and most times he paid for not selling at that time. Tommy says all of us have been in that situation. Usually, the public will tell the truth and auctions are the best barometer for prices and it will also tell you where price trends are going.

Bruce asks if women are getting more involved in auctions. Tommy says this is a growing trend as it used to be a male dominated field. Tommy says 20-30% of classes for auctions are now women.

Bruce asks about legislative issues that are affecting auctions in general. Tommy says that when legislation postpones the sale of assets it usually means there will be net price deterioration. Real estate is very fragile and unattended and vacant homes tend to lose value.

Bruce says Fannie Mae and Freddie Mac postponed auctions for their properties but in April have started back up. Doing this moratorium cost them money. Tommy says their unwillingness to accept market value has cost them millions. The more they postpone, the worse it will get.

Bruce says he read the auction magazine that in the last few years $270 billion worth of assets were sold. Tommy says this is not a record but getting close. There’s been steady growth in the total dollar sold at auction. 2008 saw prices for assets decline so volume went up but prices were down due to devaluation. So in volume, 2007 and 2008 were record setting years.

Bruce talks about trustee sales and how the lack of advertising doesn’t help the cause. Bruce asks if the National Auctioneers Association has any intent to try and get involved in the trustee sale process. Tommy says that was one of his main goals as President was to do away with the traditional foreclosure process. If the home was sold at the trustee sale to an end user it would save the mortgage holder at least $15,000 in transaction fees. This is not including price declines. This would be of huge benefit to the mortgage industry as a new loan with a new end user would immediately take the property.

Bruce talks about current laws and issues of cities hiring people solely to write fines to homes that are considered blight and that are violating codes. Tommy worries that these types of laws only makes lenders not excited to loan which further exacerbates the lending policies we currently face. No one will want to lend in these areas.

Bruce asks Tommy if he’s nervous about a shift in the American perspective. Tommy says he is concerned that capitalism and private enterprise is something that Americans are now wondering if they should be in favor of. Bruce says he’s concerned as well for some of the things that he’s seen and hopes we can solve some of these issues soon. At “I Survived Real Estate 2008” several solutions were presented but none have been implemented. Bruce things banks could save themselves so much time and money by doing so.

Tommy talks about his pre-foreclosure auction concept. Some Realtors are doing something very similar without approval. Tommy says they’ve implemented something very similar in their company and they’ve tried it out with consumers. As soon as a consumer was falling behind, Williams and Williams worked with the consumer to present the property to the public as well as possible. The final offer was presented to the lender. However, the loan servicer is typically the decision maker and is far removed from the actual decision maker. The goal needs to be lenders getting rid of this stuff as soon as possible to get things moving. This particular solutions gets a new person in the home right away.

For more information visit williamsauction.com or thenorrisgroup.com. Join us next week for part two with Tommy Williams.

Tommy served as President of the National Auctioneers Association in 2008 and is current Chairman of the Board. Tommy also graciously took part in I Survived Real Estate 2008 last year.

Thomas L. Williams is a graduate of Penn State University (B.S. Animal Science) and the Certified Auctioneers Institute (CAI). Representing the third generation of Williams family auctioneers dating back to the mid-1800s, Williams is also a graduate of the historic Reppert School of Auctioneering. He has over 40 years experience in real estate auctions, land development and real estate investment. He currently serves as President of the National Auctioneers Association.

A founding partner of Williams & Williams, Williams served as president from 1986-2000, and became board chairman in 2001. He also co-founded and served as managing partner of Lowderman & Williams Auctioneers from 1965-85. He has conducted over 10,000 auctions in all 48 of the contiguous United States and Canada, and is an advisor to auctions conducted throughout Western Europe, South Africa, Australia and New Zealand.

An avid cattleman, Williams also owned and operated Bradmar Angus Farms from 1965-85, after which he continued to serve as a herd and genetics consultant for many of the nation's premier Angus cattle breeders.

Williams is a licensed auctioneer and real estate broker in over 20 states, and an active member of the National Association of Realtors.

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Friday, April 3, 2009

116-TNG Radio - David Rosnick 4-4-09

Bruce Norris is joined this week by David Rosnick, Economist at the Center for Economic and Policy Research.

Bruce talks about reading several years back that the Baby Boom generation was worth trillions and in great position to retire. David says the Baby Boomers have a fair amount of wealth and every generation typical has grown in wealth over the years. Baby Boomers, however, have been recently hit by the stock market and housing bubble that has caused some great losses.

In a recent report written by David and his team on this very issue, it says the Baby Boom situation looks much bleaker than 8 months ago. Bruce asks how they are coping with this fact. David says the Baby Boom generation has been witnessing the trend for two years. Last summer the savings rate started to increase and consumption has really slowed. The full effects of this contraction in spending and consumption has yet to fully hit the market. David says he’d like to see the government continue the money stimulus and look into subsidizing shorter work weeks, vacation, and sick leave.

Bruce asks if the wealth members of the Baby Boom generation would be harder hit by stock prices and the poorer be more affected by the real estate declines. David says the wealthiest are indeed more likely to own stock but are also more likely to be home owners. The bottom 1/5 of households could get completely wiped out with foreclosure.

Bruce asks David how he feels about recent solutions presented by the government such as the cramdown. David says he’s not so concerned but would like to see the homes go back to the bank and perhaps the individuals getting to stay in their homes and pay market rent. David says the bank doesn’t want to try to take it over and sell the property in this market. By keeping the homeowner in the home, it’s a win-win situation. Bruce brings up that the prices are very skewed in California. David says the bank just needs to decide how they want to take the loss. By not making this mandatory the banks would not participate as they are being a stubborn. Bruce asks how the lenders would react if this was made mandatory. How much would then be available for lending? David says there will always be solid prospects and that it wouldn’t really matter.

Bruce asks David about people stating their income and if they should be held responsible for that. David says that lenders were more responsible for that as he understands it. When real estate was headed up, it didn’t matter and no one cared. This is an example of an unsustainable home bubble that people refused to acknowledge.

David created a housing cost calculator which compares owning vs. renting the same home. Bruce asks if the price to own is much more than renting. David says historically it hasn’t been that different. David says when it went way out of whack that it was almost guaranteed that there would be loss.

Bruce asks if bubbles ultimately benefit people. David says bubbles that are uncontrolled is a problem. Bruce says many were refinancing and spending the money. There must have been a short-term streak of wealth. David says people thought they were very wealthy and savings rates went way down.

Bruce asks if there should be some acceptance of risk when any investment is made. David says experts gave people a lot of bad advice and since there was a lack of an alternative voice, it wasn’t very fair. People were told that real estate was the way to wealth. Bruce asks if people should absorb that risk or if there is a backstop to save them. David says Social Security and defined benefit plans act as that backstop. Personal savings is only one alternative. David explains the difference between defined benefit plans versus defined contribution plan. Bruce says that guarantees of payout were as good as investments made. David says the bubble market really hurt these potential retirement funds. When things get so out of line, people make bad planning decision.

Bruce asks if defined benefit plans for cities like Vallejo that just declared bankruptcy will ever see that money. David says in California he’s not sure who is getting what. Bruce says that defined benefit programs typically have a projected return rate and almost all have seen losses. David says that those promises will most likely not be able to be upheld because of the economy.

Bruce asks David is he is afraid for seniors as they retire. The Baby Boomers encompasses the 45-64 age range. The older baby boomers are about to retire so there’s a little more concern there. The younger Baby Boomers have a little more time to get back on track. Overall, they aren’t looking good so far. He says the lower 1/5 could be completely wiped out because of foreclosure.

Bruce asks if we should be worried about the Social Security Program since the baby Boomers will have less population paying for benefits as they retire. He says it’s nothing urgent but today the health care costs are getting worse and are more of an issue as Medicare and Medicaid need to be helped. David says socialized medicine might be a possibility since it’s worked in other countries. We have the best medicine but the worst delivery system.

In David’s report entitled “The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble,” David says the net worth of Baby Boomers that owned a home was less than those that were renters in 2009 which is surprising. David says wealth isn’t just in equity and the housing and stock bubble real caused a problem.

More on this report at the Center for Economic and Policy Research at cepr.net. Next week join us as we welcome back Tommy Williams, co-founder of Williams and Williams auction company.

David Rosnick is an Economist at the Center for Economic and Policy Research in Washington, DC. He has a Ph.D. in Computer Science from North Carolina State University and an M.A. in Economics from George Washington University. He has written numerous policy papers including "The Burden of Social Security Taxes and the Burden of Excessive Health Care Costs" with Dean Baker, March 2005; "Poor Numbers: The Impact of Trade Liberalization on World Poverty", with Mark Weisbrot and Dean Baker, November 2004; “NAFTA at Ten: The Recount,� with Mark Weisbrot and Dean Baker, March 2004; and "Black Swans, Conspiracy Theories, and the Quixotic Search for Fraud: A Look at Hausmann and Rigobon's Analysis of Venezuela's Referendum Vote" with Mark Weisbrot and Todd Tucker, September 2004; and "The Forty-Four Trillion Dollar Deficit Scare," with Dean Baker, September 2003.

He is the architect of a growing number of calculators including CEPR's Accurate Benefits Calculator which compares current-law Social Security benefits to the Bush Plan based on "Progressive Indexing." He also created the Housing Cost Calculator, which compares the cost of owning a home relative to renting for a potential new homeowner. It gives homebuyers a sense of how the current bubble in the housing market might affect them. Prior to joining CEPR, he worked as a Research Associate (postdoc) at the North Carolina State University at Raleigh Department of Computer Science.

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