Our favorite real estate stories (Week of April 17)

Our favorite real estate stories (Week of April 17)

Is living in D.C. worth it for Millennials? Are robots taking over the home construction business? Why should you hire a real estate attorney anyway? All this and more in this week's favorite stories.

The Robots Streamlining Home Construction | Urban Turf

Humans pick up where the robots leave off, adding details to more-customized pieces and moving and packing the products to be shipped to development sites.

Selling Your Home in a Seller’s Market Isn’t as Easy as You Think | Washington Post

Some say a home in this market will sell itself. That’s true, but only if it’s priced strategically, staged well, photographed professionally and marketed properly.

For Millennials, is living in Washington, D.C. worth it? | Curbed DC

What needs to happen for developers to keep Millennials in the District is to construct housing that will appeal to the values of those who are trying to build a family: good schools, low-cost housing, and more space.

Republican tax reform plan puts 1031 Exchanges on the chopping block | Bisnow

Investors use 1031 exchanges as a way to defer the tax from any capital gains earned through the sale of a property, so long as the money is immediately used to purchase another asset.

Buying a house? Hire a real estate attorney | Huffington Post

Attorneys are the only professionals involved in the real estate transaction who represent you and are ethically bound to act in your interest.

3 must-have apps for real estate agents who crave better cyber security

3 must-have apps for real estate agents who crave better cyber security

The threat cyber criminals pose to real estate agents – and specifically their inboxes – has come up in a lot of recent conversations within the real estate and title insurance world lately. Wire fraud scams have cost the industry millions, if not billions, over the past decade or so.

At Federal Title, we’ve received several phony emails supposedly from real estate agents, asking us to wire funds to a particular account. We’ve read about these scams happening in other parts of the country as well.

Our staff is trained to spot these fake emails. We also make phone calls to agents, lenders, buyers and sellers to ensure the funds are going where they are supposed to go because we take our clients' privacy and security very seriously.

But in the interest of cyber security for all, we can recommend a few apps that we think are essential for better inbox protection. These services are free to use and go a long way toward protecting sensitive information, such as the kind that is exchanged throughout the homebuying process.

ProtonMail

First and foremost, make sure you’re sending sensitive information through encrypted email. Most email by default is transmitted in the clear or encrypted after it is sent to the email provider’s server, which means it’s possible for emails to be intercepted. Sending emails over free and public WiFi networks, such as in a coffee shop, makes the contents of one’s emails particularly vulnerable.

When it comes to buying or selling homes, it’s necessary to report personal information such as social security numbers, salary history, alimony payments, wage garnishments, etc. Your real estate agent and lender as well as third parties like the title company are legally required to maintain confidentiality, but a rogue party like a cyber-criminal is not.

ProtonMail, a free and open-source end-to-end encrypted email service that was originally created for researchers at the European Organization for Nuclear Research (also known as CERN in Switzerland) offers a more secure solution. Available as a webmail client or via the iOS / Android app, ProtonMail allows the user to encrypt email contents and data before they are sent to the ProtonMail servers.

With the click of a button, a user can enable to the encryption feature on ProtonMail and set a password, which is then sent separately to the intended recipient(s). Without the password, the contents of the email would present as a series of jumbled characters rendering the email useless to a cyber-criminal.

Another cool feature of ProtonMail is that it allows the user to set an expiration time for the message so that the contents of the email become inaccessible after the pre-determined number of minutes, hours or days, whether someone has the correct password or not.

LastPass

Most IT professionals will usually advise their clients to create a unique password that contains upper- and lowercase letters, a number and a character. The password should also be double-digits in length – and it can’t be used for any other accounts! To make passwords even more interesting, some companies require their employees to change passwords every month or quarter – and it can’t be one that’s been used in the past six months!

Who has time to remember so many random sequences of letters, numbers and characters? It’s really no wonder that so many of us will still default to easy-to-remember phrases such as “Password123!” or passwords that can easily be socially engineered such as kids’ or spouse's names, or mother’s maiden name.

That’s where a password manager service like LastPass comes in quite handy. Essentially, it’s a digital lock box that protects all your unique passwords. With a service like LastPass, all you have to do is remember one difficult password. LastPass will automatically remember and fill in login credentials for every site in your lock box.

LastPass is certainly not the only password manager on the market, but it happens to be the service we like. Skeptics out there may be wondering what happens if a user’s LastPass master-password is cracked, or if a security breach occurs that compromises hundreds of passwords such as the security breach of LastPass in 2015?

That’s where two-factor authentication can really save the day.

Google Authenticator

We’ve talked about two-factor authentication before, a second layer of security that user must clear to gain access to an account. A user must configure two-factor authentication with an external device, usually a smart phone or a thumb drive. We like Google’s free Authenticator app.

Services like ProtonMail and LastPass both offer the option to configure the account with two-factor authentication, and we highly recommend our clients take that extra precaution to protect their encrypted email account and password manager service. (After all, if a cybercriminal gained access to either of those services, it would undermine the whole purpose of this post and likely cause all kinds of hassle.)

When two-factor authentication is enabled, upon logging in a user will either receive a text message containing a six-digit code to unlock the account or be prompted to enter a 6-digit code from her authenticator app. In either case, the code is randomly generated and changes every 30 seconds making it virtually impossible to crack with a brute force attack.

Many social platforms offer some version of two-factor authentication including Facebook, Twitter, LinkedIn, Gmail and Yahoo! Mail. For independent contractors who use TurboTax or Mint to manage their finances, Intuit also offers a two-factor authentication option for their suite of services.

What is two-factor authentication, and why is it important for your real estate business?

We’ve noticed an uptick in agent email addresses that have been compromised by cyber criminals with the intent of defrauding home buyers, sellers and title companies – and most agents are totally unaware when we tell them.

The emails we’ve received of late are generally inquiries about wire transfers of seller proceeds. The sender is hoping the recipient (in this particular scam, title companies) will fall for a request to wire funds to their “client’s” account. If the victim is duped and sends funds, the fraudsters will quickly clear the account making it virtually impossible to recover the funds.

Reports of wire fraud scams have come in from all over the country and have cost the industry millions, if not billions, of dollars over the past several years.

These emails inquiring about wire transfers don’t come from the agent’s legitimate email account either, which is why the agent is often unaware any cyber hacking has occurred. Instead, the emails come from phony email accounts that look almost identical to the agent’s legit email account that was hacked – perhaps an extra letter, hyphen or dash is the only difference.

By the time the title company receives one of these phony email inquiries, the real estate agent’s legitimate email account has already been compromised along with all the contents of the inbox. Information pertaining to upcoming closings, specific property addresses, names and email addresses of other parties in the transaction are all used to bait the wire-fraud trap.

Needless to say real estate professionals must do all they can to protect their inboxes and the interests of their buyers and sellers, and email accounts have proved a particularly vulnerable area for attack. That’s where 2-factor authentication comes in handy.

What is two-factor authentication?

Pretty much like it sounds, two-factor authentication creates a second layer of security that a user must clear to gain access to the account. A classic example is the ATM card. To take money out, the individual must know their pin code (password) AND be in possession of the bank card that’s linked with the account that matches their pin. Having one or the other is not enough.

Two-factor authentication works very similarly with email, and many major email providers such as Gmail and Yahoo! Mail offer the option. To configure, a user goes to account settings, ticks the box to enable two-factor authentication and enters her mobile phone number. There’s an option to receive a verification code by phone or text. Enter the verification code to configure two-factor authentication with that mobile device.

From then on, any time the user logs into her account she must also enter a unique code to gain entry. It might seem like a hassle, but it increases email security significantly.

Even if an individual’s username and password are compromised – maybe they accidentally downloaded malware from a spam email or used public, unsecured WiFi to access their email – the criminals cannot gain access unless they also possess the specific mobile device that was configured with the email account.

The two most common two-factor authentication methods rely on text messages and/or mobile applications to produce the code.

With text message, a user logs into her email account with username and password and then receives a text message on her phone that contains the unique six-digit code. Once she successfully enters the code at the email login, she unlocks the second layer of security and gains access to her account.

A second method is similar to the SMS approach but instead relies on a free smart phone app, such as Authenticator by Google, which produces a new six-digit code every 30 seconds. A user logs into her email account with username and password and then opens the app to obtain the unique six-digit that unlocks the account.

With both methods, the user must have knowledge of their username / password AND possess a specific device that’s configured with the email account. Knowledge of the username / password makes one factor, and possession of a specific device makes two factors.

Catching up with the First-time Homebuyer Tax Benefit Amendment Act of 2015

Catching up with the First-time Homebuyer Tax Benefit Amendment Act of 2015

First-time buyers and real estate pros in the District of Columbia awaiting word on the status of the First-time Homebuyer Tax Benefit Amendment Act of 2015 can expect to hear a response from the office of Mayor Muriel Bowser this week.

A final version of the bill that would amend the District of Columbia Deed Recordation Tax Act was transmitted to the Mayor’s office Feb. 2, and a response is due by Feb. 16.

The revised transfer tax rule would retroactively go into effect Oct. 1, 2016, according to the final bill, provided the measure is approved by the Mayor and passes the 30-day congressional review period.

As we previously reported, the bill will create a new transfer tax rate of 0.725% for homebuyers who have never purchased a house, condo or share in a cooperative unit in the District of Columbia. The current transfer tax rate for D.C. homebuyers is 1.1 percent on purchases of $399,999 or less and 1.45 percent on purchases of $400,000 or more.

The median home price in the region soared to a record high of $446,000 last summer, the Washington Post reported.

When we checked in last April with the bill known as B21-0417, or the First-time Homebuyer Tax Benefit Act of 2015, it was under committee review and awaiting scheduling for a mark-up. That happened last November.

After a first reading of the of the bill was delivered Dec. 3, 2016, Councilwoman Elissa Silverman (D-At Large) was the only one to vote against the measure, later telling Washington City Paper that because the bill did not specify income limits, the tax break would benefit a homebuyer in Ward 3 five times more than a homebuyer in Ward 8, rendering the benefit "regressive."

Councilwoman Silverman was not the only individual to express this sentiment. The lack of an income restriction has been a concern of the bill’s critics all along.

During testimonies that took place about a year ago, a representative from the D.C. Fiscal Policy Institute said the city would negatively impact its Housing Production Trust Fund, which has produced or preserved more than 8,000 affordable homes since its inception in 2002.

“Rather than provide a new tax benefit for all first-time homebuyers, DCFPI recommends that policymakers review the city’s current deed tax assistance to low- and moderate-income homebuyers and make adjustments if they appear warranted,” said DCFPI Housing Policy Associate Claire Zippel in her testimony last February.

The city regularly alters the income and purchase price restrictions on its popular D.C. Tax Abatement program, and the D.C. Office of Tax and Revenue most recently increased the income and purchase price limitations at the end of last year.

However, the income-restriction concern in regards to B21-0417 was addressed Dec. 13, 2016 when Councilwoman Anita Bonds (D-At Large) introduced an amendment that added two eligibility requirements, an income limit of 180 percent of the area median income as well as proof of District residency.

The median income in D.C. in 2015 was $109,200 annually, so buyers earning up to $196,564 could potentially qualify for transfer tax relief.

The amendment also created a lifespan of four years after the program’s implementation date, at which point the Mayor must submit a report to City Council that reviews the benefits or impact of the tax relief program on homeownership rates.

With the Bonds amendment in place, Council voted unanimously in favor of the First-time Homebuyer Tax Benefit Amendment Act of 2015 on Dec. 20, 2016.

DC Tax Abatement income, purchase price limits increase

DC Tax Abatement income, purchase price limits increase

For the latest DC credit program, please view information here on DC's Newly Enacted First-Time Homebuyers Recordation Tax Reduction program that went into effect October 1, 2017.   

Purchase price and income thresholds to qualify for the popular DC Tax Abatement Program have increased, hopefully making it easier for more homebuyers to become homeowners.

The District of Columbia Office of Tax and Revenue upped the purchase price threshold to $439,160 from $408,000.

At the same time, the income threshold for a single buyer increased to $58,980 from $57,540 while the income threshold for a two-person household increased to $67,380 from $65,760.

In "Economic Development Zones," the income limits are higher. For a single buyer, it's $67,265 and for a couple it's $76,890.

For more on income limitations and the DC Tax Abatement Program, please visit our page on the DC Tax Abatement Program.

Real estate website Trulia reports the median sales price for homes in DC was $539,000 over the past three months, an increase of 5 percent over the previous year.

The DC Tax Abatement Program provides an exemption from the DC 1.1% Recordation Tax and an allowable credit from your seller(s) of 1.1% equal to the DC Transfer Tax. Additionally, the program provides a five-year real estate tax abatement that begins October 1 following your date of closing.

The numbers in this article may be out of date. Visit our guide how to qualify for DC Tax Abatement for the most current information.
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