Entries Tagged 'Finance' ↓

Many people think of a closing gift as something that should be given to the home buyer by his or her close family and friends. The gift serves as an accolade for the person’s accomplishment. More and more buyers and sellers in a real estate transaction are considering the real estate closing gift idea. To the recipient, a real estate closing gift idea can serve as a courtesy that was not expected. It shows a sincere appreciate for business. Even more than that, the closing gift can serve as a way to generate referrals.

When you first begin to think of a real estate closing gift idea, it might not strike you as a referral generation tactic. And it shouldn’t. The purpose of coming up with a real estate closing gift idea and the subsequent purchase of the gift is not to get referrals. Instead, the gift should be given as a genuine token of appreciation for the services of the client. Whether you are the buyer or the seller in the transaction, coming up with a real estate closing gift idea builds a sense of satisfaction with the client. This satisfaction then leads to positive chatter among friends. In turn, the chatter builds awareness of your services among potential clients.

Many people involved in real estate transactions, particularly agents and brokers, consider it ludicrous to take the time to come up with a real estate closing gift idea then give this gift to a client. This is not the way they are used to doing business. Traditionally, the real estate closing gift idea was not even considered as a means of doing business. Although some practitioners have begun to embrace the real estate closing gift idea, many remain adamant in their position not to buy such gifts for clients.

There is absolutely nothing wrong with the real estate closing gift idea. In fact, it is very similar to a monetary bonus or gift that many people in business give to their clients at the close of a deal. The gift giving idea has long been a part of business transactions. It is used as a way to show appreciation. Why not incorporate the real estate closing gift idea into the business of real estate? It can only build relationships and make the business better.

If you have decided on purchasing a gift for a closing gift, make sure that you put some thought into the real estate closing gift idea that you choose. More than likely, you have been spending a considerable amount of time with your client. During this time, you may have had the chance to learn a little about their tastes. You can use what you know about your client to come up with a real estate closing gift idea. When you put thought into your real estate closing gift idea it will show in the gift that you purchase. The more thought you put into the gift the better reflection it will have on you.

The idea of giving a real estate closing gift to a client is fairly new. Even though some practitioners haven’t embraced the real estate closing gift idea, that doesn’t mean that it is inappropriate. This makes the giving of gifts even more genuine since it has not become a norm. Consider giving a real estate closing gift at the close of your next real estate transaction.

What is Stamp Duty?
Stamp Duty is a tax that needs to be paid to the State Government in India. This is not required to be paid on transactions but on instruments like gifts, power of attorney, certificates of sale etc. To keep uniformity in rates for instruments of profitable profile (like letters of credit, share transfers etc.), Entry 91, List 1, Schedule VII of the Indian Constitution keeps the power related to them only with the Central Government, which creates rules and policies that are applicable to all states in India. The State can decide the rates for all other instruments. Most of the states follow the Indian Stamp Act of 1899 (with suitable amendments) but few have placed their own legislations in place.

This tax is payable either before the execution day, or on the day of the execution or on the next business day after the execution. Execution is supposed to happen when concerned people place their signatures on the instrument. If the name of either executor is missing in the instrument, such instrument is treated as improperly stamped and maybe sent to the Collector of Stamps for recovering stamp duty. An instrument is considered legal by the court of law only if proper stamp duty is paid on it.

Who is Accountable?
When an instrument is not accompanied with an agreement, it becomes the obligation of the purchaser to pay the stamp duty. So it is borne by the lessee in case of a lease agreement and by all parties in equal share in case of an instrument of exchange. It is mandatory to purchase the stamps in the name of either of the instrument’s executor. The government is quite strict when it comes to disclosure of facts. If it is proved that facts were hidden in the instrument with the intention to defraud the government, all people involved (the buyer, the purchaser and the preparer of the instrument) can be prosecuted under the Stamp Act.

How To Get The Market Value?
The duty is always calculated either on the basis of the market value or the stated value of the instrument in the agreement, depending upon which is more. To get the market value, one needs to know the price the instrument (like land) will fetch if sold in the open market. Market value is also calculated on the basis of following factors:

1. The intended purpose of the land
2. Plot size
3. Estimation (market value increases if land prices are expected to rise)
4. Value of neighboring plots
5. Bookings made by local authorities.

A person can have his case registered in the Collector’s office (under Section 47-A, Indian Stamp Act, 1899) if he finds the market value calculated by the Registering Officer too much different from his own estimation. The Collector then determines the market value and duty payable after the concerned party has deposited 50% of the duty as per the value estimated by the Registering Officer. Depending upon the final verdict, this amount is either refunded or adjusted towards the final settlement.

Getting a mortgage in Canada is very easy these days. Mortgage means getting a loan as big as taken by real estate builders. But before taking a loan the burrower must be aware of key elements of the contract:

• Term: Term means the period of time in which the lender gives a mortgage on a fixed rate of interest. Ex: 8-year term.
• Amortization: It is the period of time, which can be taken by a borrower to pay off mortgage in full. Ex: 20-year amortization.
• Open Mortgage: This allows the borrower to pay off full mortgage at any time.
• Closed Mortgage: With the closed mortgage the ability of borrower to pay off mortgage early is limited.
• Variable Rate Mortgage: This is the mortgage in which during the term interest rate fluctuates.

The person is qualified for the mortgage equivalent to three times family’s gross annual income with the condition that the person’s must have a steady employment, decent credit history and very little debt. The banks qualify a person for the mortgage by calculating two ratios. First ratio is (GDSR) Gross Debt Service Ratio which is calculated be adding monthly mortgage payment + 1/12th of annual property tax + $75 for monthly heating costs and then this number is divided by Gross Monthly Income, if it works out to be less then 32% then the person is qualified for the mortgage.

The second ratio is Total debt Service Ratio (TDSR) is calculated by adding property taxes+ mortgage payments+ heat + lines of credit + cost of car lease + loans + minimum payment on credit card then this figure is divided by gross monthly income, and if this ratio turn out to be less then 40% then the person qualifies for the mortgage.

For calculating gross monthly income, banks generally consider basic salary like hourly salary 40 hours per week. And if the person in addition to this earns commission, overtime, bonus, tips etc then he will have to proof that he is getting them consistently for 2-3 years. Then only it will be included in gross monthly income.

For self-employed person to qualify for loan, banks will look at the average of net taxable income for 2-3 years. For this Notice of Assessments from the Canada Customs & Revenue Agency has to be submitted with bank.

Also the person must have a good credit history of min 5-6 years. If a person consistently late in making credit card or loan payments or even forgetting payments of departmental store credit card, then the person will have hard time in getting a mortgage.

If the person is giving 5% as down payment then the lending criteria of the bank will be strict but if it is 50% then they will adopt flexible policies. The most important is the real estate used as security. Banks will approve only highly marketable securities like in subdivision or large urban areas. One should have a pre-approved mortgage before buying a property.