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Tuesday, September 3, 2013

The legal guide for commercial real estate brokers

Avoid expensive litigation with detailed and thorough contract terms
70% of tenant-owner disputes are rent related
It makes sense to have a sense of law, or legal morality, behind the idea of “owning” land. Is that land truly yours? This deed or title says so! As they always say in the legal industry -- if it’s in writing, it’s legally binding. Such is the case for the niche of real estate law, a particularly complex practice varying from state to state in terms of what’s required in a real estate transaction. Such requirements are particular for obvious reasons: we’re talking about a pretty big ticket item here, a house.

Once you know how real estate law works, though, discussing issues with a broker, a real estate attorney, agent or whoever, wouldn’t make you seem so much like a fish out of water or a duck in a sand trap. Rather, you’ll be the legal partner in probably one of the greatest transactions of your life. So pay close attention here. This could get pretty complex.

Legal terminology and full disclosure


That agreement between the broker, seller and buyer is crucial. Hence, the words better make both legal and literal sense. This is especially the case when each state has various specific requirements when it comes to real estate law. If you’re a broker, there’s one priority on your plate: make sure you consult with a good real estate lawyer. Why? Because as good a real estate broker can be, legal mistakes are common, such as the failure to represent the specific details of the property and to clarify who you would represent. This is especially confusing when dealing with dual agencies.

Common advice (besides consulting with an attorney) is to fully disclose all information. Make copies of just about anything in question. Don’t leave a single page out. Additionally, a broker has to detail specifically in documentation such concepts as “zoning,” “utility usage” and “square footage.” Touching on everything is key. If anything is ever left out, it could result in litigation issues.

Even consider certain fiduciary duties. If a realtor or broker is a fiduciary, that individual has specific duties entrusted to him or her to always attempt to get the very best deal out of a property, disclosing any potential defects within the property and implementing all kinds of state-specific language especially in exclusive listing agreements.

In this day and age when the real estate market has sat in the ashes of a fiery downpour, legal precedence is that much more important. Brokers must be on the up and up about the law.

The new considerations of this day and age in real estate


Speaking of the state of the real estate market, it’s a tough battlefield out there. Having the legal power to back you up, though, will keep you relatively unscathed. There are some facts to keep in mind, though, such as the nearly 70% of tenant-owner legal disputes result from late rent payments. It doesn’t seem like much of an issue when you think about it, but when it comes to money in a crashing market, something has to be done.

Why is it such a big deal? It’s simple. Because of the difficulties in the real estate market, many landlords are actually quite reluctant to go the standard route and file for eviction, even for tenants who end up defaulting on their payments. It has been getting that much more difficult to find new tenants. No tenants means no money. Instead, landlords file a simple “breach of contract” lawsuit.

To muddy the waters even more, property liens these days often do more harm than good to brokers for obvious reasons. When lenders don’t like to approve of documentation for property titles these days, it’s that lien that’ll actually penalize a broker by essentially locking down that owner with no way to provide for those broker’s commissions. The owner can’t sell the property; the broker can’t make any money.

Even worse, developers won’t pay the full commissions until construction actually begins. That sometimes doesn’t turn out so well for obvious reasons -- scheduling, weather, etc. etc. -- and if the developers don’t pay, the workers don’t get paid, the workers don’t show up, the house doesn’t get built, the deals go sour, and the tenants don’t even get a chance to move in because the home hasn’t even been built, yet! It’s not a pretty sight.

Moreover, frivolous lawsuits these days become the norm, because a lot of tenants and visitors try to look for an easy way out of an agreement by addressing a so-called “bad” relationship of conflict between the landlord. An example of a type of lawsuit would be a “slip-and-fall” issue. You get into some kind of minor “accident,” and ultimately the responsibility falls on the head of the owner of the house: the landlord. You can do some research of news in real estate law to find that any particular landlord might’ve had to deal with a $125K lawsuit regarding a mouse infestation. Again, it’s not a pleasant picture.

What it takes to make it as a real estate broker


Costs like that ultimately affect brokers, shrinking commissions and diminishing future transactions, thereby further crushing the real estate market. What can a broker do? Simply do the research. Before even addressing the possibility of a real estate transaction, ensure that everything’s kosher with a property title, that you’re dealing with only the property owner, and literally become proficient in the legalese lingo.

In essence, make sure you’re armed to the teeth! -- before you jump into the lion’s den. The real estate market is a dangerous place these days. Be prepared.


About the author: Matt is the CEO at UpCounsel - the fastest growing legal solution for businesses. You can follow more of his legal tips on twitter @upcounsel.
Image License: John Picken; CC BY 2.0 

Monday, September 2, 2013

How the commodity channel index works

The commodity channel index (CCI) is one of many financial techniques that have been developed by mathematicians, economists, and financial analysts within the last few decades. The commodity channel index is used to assist with predicting stock price and other financial instruments movement. The Commodity Channel Index (CCI) is one such technique and was first introduced in 1980 by a man named Donald Lambert. 

The CCI is a mathematical indicator that measures price oscillations around an average stock price and uses a range from -100 through +100. Prices closer to +100 in the range indicate more buying of a commodity and prices closer to the -100 point in the CCI range indicate more selling has taken place.

Why the commodity channel index is useful


The commodity channel index is useful for day traders because they can monitor the stock price in relation to the commodity channel index to see if prices suitably positioned for a possible trade. In any given day of trading a stock price may move into and out various points within the commodity channel index range which helps the trader navigate price movements. The CCI is considered beneficial in the following ways:

• Can be used across securities markets including stocks, commodities, and foreign exchange.
• Is readily available in software applications and presented in graphical format.
• Indicates where a securities price stands in relation to CCI range.
• Helps traders determine possible entry and exit points for trading.
• Points out where a stock, commodity or other security may be overbought or oversold.
• Provides an ongoing measurement throughout the trading day.

How the commodity channel index is used


The commodity channel index is used by calculating 2-3 equations on an ongoing basis. These equations are the moving average, and 1-2 long term commodity channel index equations. The moving average is used in determining an average security price over a period of time and the commodity channel index is used to both establish a range of high, low and middle points for the securities price and where within the range a current stock or commodity price is. The results of these equations are often presented in the form of line graphs alongside the actual historical price movement of a security.


Calculating the commodity channel index

If one's computer, spreadsheet application or technical analysis software is not working one may find themselves in the position of having to calculate the CCI manually. Performing the manual calculations may also assist in understanding the concepts and reasoning behind the commodity channel index. The calculations are as follows:

The commodity channel index uses three sub equations in the main equation. Those equations are 1) average daily price, 2) moving average daily price and 3) mean deviation of price from the moving average daily price.

1. An average daily price is calculated using different price points in a day such as open, close and midday or high, low or close or high, low or open. All these values could also be used and it depends on which numbers one things are more accurate. The following is an example of the calculation. Open $25.00+Midday 24.50 +Close 24.75=74.25/3=$24.75. Thus $24.75 is the average price for a day using open, midday and closing prices.

2. The moving average is determined by calculating the average daily price for a given number of days such as 60 days. These daily averages are then added and averaged themselves. For example, daily average day 1+ daily average day 2etc/ number of days=60. If the total of daily averages was 1650 then divided by 60 would yield a moving average number of $27.50.

3. Price Mean deviation is the difference in a stock or commodities price from the moving average. Like the previous two calculations this is also an average but the numbers being averaged are the difference of a daily price average from the moving daily average. For example, if in 60 days this difference adds up to $10.20, divided by 60=0.17 making the mean price deviation .17 cents.

4. Last the CCI is calculated by using #1 , #2 and #3 above by subtracting the moving average daily price from an average price on a particular day for which the trader wants the indicator for. This value is then divided by .015 multiplied by the mean deviation. Using our examples above we get the following using $28.00 as our latest average day price.

CCI=Latest average price-Moving average price/ .015 * Mean deviation.
Note: (The .015 was included by Lambert in the calculation to allow for proximity to the 200 point scale so a majority of price values would fall within it.)

CCI=$28.00-$27.50/.015 *.17=.50/.00255=196.07
Thus our commodity channel index number is well over +100 indicating a potentially overbought position!

The Commodity Channel Index is one of many financial analysis tools available to day traders. This being the case it is often used alongside other useful indicators such as volume indicators, candlestick analysis, relative strength indicator and the zero line cross indicator. To use the CCI alone may not provide an adequate description of the price movement pattern that is being observed and therefore may at times if not often, be insufficient as price momentum indicator. Nevertheless,

Sources:


http://daytrading.about.com/od/indicators/a/CCI.htm
http://www.asx.com.au/research/charting/library/commodi ty_channel_index.htm
http://www.investopedia.com/term s/c/commoditychannelindex.asp
http://stockcharts.com/ school/doku.php?id=chart_school:technical_indicators :commodity_channel_index_cci
http://en.wikipedia.org/ wiki/Commodity_Channel_Index

Sunday, September 1, 2013

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How to build credit history

Credit history is used by financial institutions and lenders to help determine the risk level a potential client poses. Without a credit history it can be difficult to acquire a loan whether it be a credit card, car loan, education loan or even financing from a lending network of entrepreneur.

Making payments on time helps maintain or build credit score
Credit score is derived from the above five factors
To build credit history fast requires knowing what the most important aspects of credit score are, and how credit history is used. According to the Fair Isaac Corporation, the developer of the FICO credit score, credit history accounts for 50% of an individual's credit score. The remaining 50% of credit score consists of items that are largely made possible through a credit history.

Since 15% of credit score is determined by the length of credit history, it makes sense to focus more on the 85% of the credit score that does not emphasize how long a credit history has existed, but rather how well one has managed types and amounts of credit within his or her credit history.

Research the credit


Research loan types, uses and rates before applying. Practical uses for loans in addition to building credit history multiply their utility. This way the credit line serves both a useful purpose while simultaneously building credit history. Also, the rate at which the loan is obtained can help with other aspects of  building credit history.

Apply for loans


Before opening a credit account, it must be applied for. Request realistic credit limits and do so in a shorter rather than longer period of time. The Fair Isaac Corporation uses time periods between credit inquiries in its credit score assessment and recommends fewer rather than more accounts be opened for persons with a short credit history. The accompanying video on this page provides tips for first time credit applicants.

Use credit


Without actually using credit that has been granted, a more complete credit history can't be attained. Using credit is important because it gives creditors and credit reporting agencies such as Equifax more information  to base a credit score on. Having a low credit balance is good for credit history. A low credit balance affects the debt to credit ratio which is the amount of credit used in proportion to the credit available. Similarly, a low debt to credit ratio has a positive affect on credit use within credit history.

Pay bills 


Paying bills on time and consistently is very important in building credit history quickly. Loans with credit cycles of 30 days or less should have at least the minimum payment posted before the due date. Paying several days early avoids late postings and potential payment history complications.

* Image license: PNE; CC BY-S.A. 2.0