by Joseph Garnett | Oct 1, 2018 | Copyeditng
Edited by Joseph Garnett, Jr.
170 Transaction Can Reap Positive Results for All
A 170 Exchange often benefits all parties of the transaction, and it also possibly impacts the economy as a whole. Sometimes, during a real estate transaction, only the seller receives any significant economic boost. The buyer usually may have to rely on a bank loan and, therefore, creates debt. However, with a 170 Exchange, everyone who participates in the transaction will possibly leave with a better economic perspective.
The Seller
As the economic benefit spreads through a 170 Exchange, the seller may be the first person to benefit. The seller may own an underutilized or underperforming property. Perhaps it is an old warehouse that is costing more to maintain than it is bringing in. Or it could be a weak investment property where the costs outweigh the benefits.
So, the owner decides to sell and utilizes a 170 Exchange. The seller can then remove the property from their portfolio for a lower cost, but reap the benefits of possibly receiving the full ideal use value as a tax deduction. This process takes a hard-to-sell property is off their hands, but they likely receive the full valuation amount as a tax deduction. By selling a property this way, all parties involved may benefit from the transaction.
The 170 Exchange generally impacts the economy positively, by potentially bringing cash to the seller and discounted assets to the buyer.
The Buyer
The nonprofit 501(c)(3) buyer may also benefit economically from this transaction. They can purchase a property to use, or as a portfolio item to boost their assets, at a reduced cost. The reduced price is vital as it enables the not-for-profits to spend their money wisely and keep as much as they can to continue doing their charitable work. The economic benefit of this transaction can mean that the charity has more money in its pocket and also has a property that they can utilize or enjoy the benefits.
The Community
The local community may also be fortunate enough to benefit from a 170 Transaction. The economic benefit from the seller can be felt throughout the city by wage increases, and better work conditions from the tax benefit. By legally reducing taxes, the seller may have the ability to spend more on workers and processes to ensure the business is growing.
Secondly, by selling a disused property, the area can be revitalized and bring in new work opportunities for locals. Revitalizing under-performing properties may also raise land values for locals and potentially provide economic benefits through that revenue stream as well.
170 Exchange Impacts the Economy
Lastly, the community may feel the economic impact of a 170 Exchange by the cash flow that comes with any property sale. A significant property sale in the local area may bring new income, possibly flowing through the community.
In general, a 170 Exchange impacts the economy and possibly benefits all parties involved in the transaction. Fortunately, the local community may also enjoy the financial gain. This process demonstrates how the economic impact of a 170 Exchange is positive. Real estate brokers wanting to do something good for the community should consider presenting the transaction to their clients.
by Joseph Garnett | Jun 15, 2018 | blogging
The commercial real estate market experiences highs and lows as the economic trends shift due to politics, policies or other economic events. As brokers, continuously adding a few new options to the repertoire may help improve client relationships and grow the company. The IRS Section 170 Bargain Sale is becoming more in-demand by clients who want to minimize tax exposure. The Bargain Sale may be for such clients looking to sell performing assets or underutilized and distressed properties.
Businessman Investor Construction Sale Property Concept.
A qualified appraiser must perform the Bargain Sale valuation. The asset is compared to other property that is fully performing in the same or neighboring market. This valuation’s outcome may be higher than the original listing price. To learn more, please read an earlier post How Bargain Sale Valuations Work.
About the Bargain Sale
The IRS Section 170 Bargain Sale originates from the War Revenue Act of 1917 that the United States Government passed. It shares some similarities with the well-known 1031 Exchange, where the tax code is used to protect wealth and economic growth. However, there is a notable difference between a Bargain Sale and the 1031 Exchange. Instead of just deferring taxes, like 1031, the Bargain Sale provides immediate tax benefits that can be used the same year as the transaction and up to 5 additional years.
Nonprofit Qualifications
The Bargain Sale made to a nonprofit entity that is federally recognized by the 501(c)(3) criteria. It is considered best practice for the nonprofit to obtain validation from one of the charity monitoring organizations. These organizations, like GuideStar, rank the nonprofits based on the use of funds, fundraising, board members and activities related to their causes. All information about the nonprofits may be found on the monitoring agencies’ websites. This action provides transparency and allows Sellers to determine if they want to complete a transaction with the nonprofit.
Bargain Sale is “Not” a Donation
Although there must be a donative intent, combining the cash received at closing with a tax rebate, the Bargain Sale’s benefits may be immense. It is important to note that the Bargain Sale is not a donation. Cash is received at closing and is combined with the tax deduction benefit of the contribution between the appraised value and the cash received.
However, some transactions may have the appearance of a donation as the seller may decide to not take any cash in the transaction. As a result, commercial buyers may find themselves saving significant amounts of income tax by utilizing a Bargain Sale for their property disposition or tax strategy.
Searching for Assets
When taking advantage of the Bargain Sale for clients, brokers should consider looking for opportunities of almost any asset that has appreciated from its basis. By selling at a potentially higher valuation rate, as per the Bargain Sale terms, the broker may facilitate a win-win situation for the seller and the nonprofit organization. The seller gets the tax benefits, which is the difference in property value minus cash received at closing. Afterward, the nonprofit takes the property to either use or sell to raise funding for its charitable causes.
Brokers’ Incentives
As for the broker’s commission, it is based on the total financial benefit to the seller. As stated earlier, the total financial benefit is a combination of the cash amount and the federal and tax savings. The selling broker’s commission is usually based on the seller’s total financial benefit which is often near the list price.
Smart brokers looking to grow a business and their clients’ best interest should be informed about the Bargain Sale. Commercial transactions totaling over $8 billion are completed every year in the form of the IRS Section 170 Bargain Sale.
Welfont Can Help
Welfont has a wealth of experience with the Bargain Sale. We are the experts with over 10 million square feet of acquisition in more than 30 states. We are familiar with the Bargain Sale Appraisal process and can help you achieve the most in cash and tax deductions for your asset. If you would like more information, please visit our FAQ page or email us at info@welfont.com. We can help provide answers for your specific property.
Written by The Welfont Group, LLC
The content found on this Welfont.com page is for educational purposes only and is not intended to constitute legal, financial, or tax advice. Please consult your attorney, accountant, tax or other advisers before acting on any information found here.
by Joseph Garnett | Apr 14, 2018 | blogging
Measuring and Evaluating a Local Content Marketing Plan
The content creation of an online local content marketing plan that attracts visitors and keeps customers’ attention and converts them into a sale all at the same time is definitely difficult to achieve!
Creating a great local content marketing plan that’s easy to use and evaluate is like going on a fun journey. Yes, this journey includes measuring and evaluating Local SEO results.
Developing a Local Content Marketing Plan
As the journey begins, an owner should consider developing a Local Content Marketing Plan, while listing and implementing steps. Finally, learning how to calculate, measure, and evaluate the success of the local content marketing plan.
First, let’s look at measuring the Success of Local Content Marketing
1. How to Determine If a Campaign is Successful
Measurement is key in understanding the results. Proper planning, allows the evaluation to be calculated at the end of the local content marketing initiative with aggregated data. Various metrics contribute to the data. Of course, you’ll then need to spend a bit of time determining what it means. On one hand, the analysis will be relatively straightforward, because the resulting data is compared against baselines and benchmarks identified earlier in the process. However, there’s a catch: you need to connect the results to your content.
2. Relating Customer Behavior to Content
Regardless of whether the results are strong or weak, it’s necessary to know if local content marketing efforts were the major influence or did something else. It becomes more difficult to measure if there is more time between posting content and evidence of results. The kind of business you are marketing and how closely the things are measured overlap and creates difficulty in its calculation. Determining how clicks, likes, and comments may relate to overall marketing goals when using the marketing of a specific piece of content?
If you want more in-store traffic and you achieve that, how will you determine that it’s a result of your measurements? Do more clicks translate into more in-store traffic?
If the goal is to get more sales, then the sales funnel stages could be significantly longer, and you could have several different marketing initiatives targeting them.
For example, the initial goal was to get them to come to an event at the office. They attended, went to the website, read an article, and downloaded an eBook – and now they are potentially in two different sales funnels. If there isn’t a CRM in place to track all the campaigns a prospect is in, it is highly recommended you consider it.
3. Gathering Metrics
The things measured are usually substituted for the things that you really want to achieve. As an example, if you want to boost in-store traffic, then measuring online engagement (clicks, likes, etc.) doesn’t really matter. Instead, ask yourself this: What are the indicators that the business is getting more in-store traffic? For example, if this is the goal, including a discount code in the online content may help. Count the number of in-store customers who use the code. The number of code users will give you an idea many customers came to the local business after seeing the content on the website or social media.
Having different measurement indicators for each piece of content may be another effective manner to calculate metrics. For example, a graphic designer wants to get clients for a website design business. Using a tool like Google Analytics, she can then track the numbers and demographics of people who read an article on her website. The designer will also know who clicked from perhaps Facebook or Twitter and then clicked through to her website to see her portfolio. To track these metrics, implement Google Analytics and set goals.
The graphic designer may follow the progress of a user who views the portfolio, completes a form, and then hires their service. It can also be determined if the user made these actions after viewing the portfolio. The metrics show which pieces of Facebook content were most effective in driving traffic to the site, and then refine the social media content going forward.
4. Adjusting Your Goals
Like the earlier-mentioned business owner who wanted to increase in-store traffic, you may reach the evaluation step and discover that your proxy measurements are incompatible with the goals. In some cases, the goal initially established is too big to be achieved in a single local content marketing campaign. In that case, you may want to consider revising that goal to be more in line with the things that can be measured.
So, what’s the bottom line? Goals, audience, content topics, channels, and measurement indicators are part of a circular planning process. Once strategically planned, it can be used repeatedly to cultivate new customers – and deepen the loyalty of existing ones.
Content marketing is the opposite of traditional marketing strategies. Content marketing should be implemented as a continuous process, with results interpreted as cumulative equity in the brand. It helps to continue creating valuable content based on the E-A-T concept of Expertise, Authority, and Trustworthiness. Google loves high-value content. So, the happier you make Google, the higher the content will rank in SERPs.
Success Starts with a Solid Foundation
Implementing solid foundations allow for successful tracking behavior and measuring success and conversions beyond a solid local content marketing plan. This foundation is part of the beginning of the process. It’s not the goal itself. It starts with the website, moves into Google Analytics set-up, goal tracking, and much more. Web Traffic Networks is here to help you get started from that solid foundation! Request a demo and learn more today!
by Joseph Garnett | Apr 14, 2018 | blogging
Donors can make an everlasting contribution to art by supporting the Legacy Society at the Dunedin Fine Art Center. These planned gifts preserve cultural values and make it possible for the art center to grow for generations to come. Since its inception, the Wheels on Wheels program continues to help sustain the artistic future of our community.
That’s why Nick Anastasakis and his family decided to build a lasting relationship with DFAC. Wheels on Wheels is now a staple in the art education community through the support of the Pougialis/Anastasakis Foundation for Art and the Pinellas Community Foundation.
What is Wheels on Wheels?
More than 2,500 school-age children have climbed aboard since the Wheels on Wheels bus launched in February 2016. In 30-45 minute sessions, they learn and practice basic pottery techniques, getting hands-on experience with new skills and tools.
The program serves up to 22 children at a time. Using a variety of self-hardening clay, students create pinch and coil pots and learn to practice throwing on a pottery wheel.
“They all walk away with something,” Still said. “It’s an experience and great exposure to the process.”
Tampa Bay Recognizes Wheels on Wheels
In February of 2018, the Wheels on Wheels program received recognition from for its enrichment of youths through art. Wheels on Wheels became a finalist in the “Be More Awards”, hosted by WEDU. Non-profit and not-for-profit organizations from 16 Florida counties participated in the awards competition. The judges placed Wheels on Wheels in the “Be More Enriched” and “Non-Profit of the Year” categories. The awards recognize organizations who work to make a difference and improve the lives of citizens in the Tampa Bay Area.
(Left to Right) Dunedin Fine Art Center’s Vice President Ken Hannon, Youth Education Director Todd Still, and President George Ann Bissett attended the ‘Be More Awards”.
Although Wheels on Wheels did not win in its nominated categories, Dunedin Fine Art Center’s youth education director Todd Still enjoys the honor and recognition from others seeing the value the program provides the community.
“It’s very rewarding to see the impact on so many different levels,” he said. “Being able to offer experiences they wouldn’t normally have.” “From start to finish, it’s kind of magical when the kids
get on the bus.”
Continuing a Mother’s Legacy
Nick, whose family’s legacy gift helps make those wheels go around, explains that youth education was of special importance to his late mother Helen Pouglialis Anastatakis.
“My mother was an educator, and she wanted to make sure that the money left behind would go toward children’s education, especially for very young children,” Nick said.
Nick studied interior design at the University of Alabama, and eventually took over his father’s business, Ember Sewing Machines.
“I’ve always been around art, that’s part of my education,” he said. “What’s scary is that in education today, in many places, they are weeding important things like art out of curriculums.” That’s why he finds the Wheels on Wheels program, in a word: “Fantastic.”
“Its a really great way of giving a touch of art to kids who can’t get elsewhere,” he said. “Mathematics and art are very well blended, so it also helps with other areas of education.”
Learn How You Can Give
A Legacy Society donation shares the gift of art and makes the Dunedin Fine Art Center better for future generations. For more information on Legacy Donations, please click here or email Linda@dfac.org.
by Joseph Garnett | Apr 14, 2018 | blogging
Welfont | Appraisers, Blog, Brokers, CPA, Seller |
Often, when a CPA, broker or seller sees a Bargain Sale Appraisal of a property, there may be skepticism. Initially, his/her thought may turn to the potential of something just too good to be true. The result from not understanding the difference between how Bargain Sale valuations work and the traditional retail appraisal process is that many profitable transactions are not considered.
Sellers lose opportunities for cash at closing and tax deductions, brokers don’t receive commissions, and nonprofits can’t benefit from the transaction when the proposal isn’t even considered due to lack of knowledge or at worse misinformation. With a better understanding of the Bargain Sale Appraisal method, participants may realize the valuation is good and true.
Importance for Understanding Bargain Sale Valuations
According to a 2013 article by the American Institue of CPAs, 88% of business decision-makers value their CPAs’ opinions. The article goes on to say ‘clients continue to acknowledge the CPAs’ lead in the core areas of tax, accounting, and audits’. This statistic shows how imperative it is for participants to understand the valuation process, especially the CPA. Therefore, if 88% of clients accept the advice of their CPAs, they have a significant influence in whether a Bargain Sale is considered.
The IRS Publication 561 outlines the necessary steps to complete a Bargain Sale, providing more information for stakeholders to gain trust in the appraisal process. Although the publication states that a qualified appraiser can complete the valuation process, Welfont uses an MAI-Designated appraiser because of the required credentials and experience.
In a recent interview with Welfont, Brad Pope, Former Managing Director of NAI Brannen Goddard, in Atlanta, GA, stressed the value of the appraisal process. “It is important that the appraiser knows about this kind of transaction, so he won’t give you one of the typical three appraisal methods: income, replacement and market value.” Pope goes on to say that he sees how the Bargain Sale appraisal method gives the property a higher valuation. Click here to see the entire interview.
How Bargain Sale Valuations Work
To better understand the benefits of the Bargain Sale Appraisal, first, let’s see how it differs from a traditional property appraisal. Then, we’ll look a what it means to become an MAI-Designated appraiser. A traditional appraisal includes the following:
- Any appraiser can perform the valuation process.
- Considers the condition of the asset and its environmental issues.
- Uses recent sales comps within a specific area.
- Uses income methodology for similar assets within a specified area.
A Bargain Sale Appraisal shares some things in common with a traditional appraisal. However, its parameters are much more lenient:
- Highest and Best Use is considered in addition to the current usage.
- Sales comps from a much longer period are allowed if there are not recent sales, and from a larger area, if there are no “good” comps available in the region of the asset.
- The appraisal is made under the assumption that neither Seller nor Buyer is under ANY compulsion to sell or buy.
- The appraiser is allowed to assume there are an unlimited marketing budget and no time requirements for the sale.
- Evaluators give replacement cost much more weight than a market valuation; more akin to an insurance appraisal.
The end effect is that a Bargain Sale appraisal can potentially result in a more generous valuation IF the property is part of a donation to a 501(c)(3) nonprofit.
Qualities of an MAI Appraiser
Although a qualified appraiser is allowed, Welfont chooses an MAI-Designated appraiser to perform a Bargain Sale Appraisal. The difference between a qualified appraiser and an MAI-Designated appraiser is the rigorous requirements to receive the designation. To become an MAI Appraiser, according to the MAI Institute, a person must have:
- Have good moral character;
- Meet standards and ethical requirements; Required to complete the Appraisal Institute Business Practices and Ethics course,
- Pass rigorous education requirements;
- Candidate must have received at least a four (4) year Bachelor’s Degree from an accredited degree-granting educational institution (or international degree equivalent for international Candidates).
- General Appraiser Report Writing & Case Studies exam
- Pass exam for Advanced Income Capitalization
- Pass exam for Advanced Market Analysis & HBU
- Successfully complete exam for Quantitative Analysis
- General Comprehensive Examination
- Specialized Experience Requirement; Must receive credit for 4,500 hours of specialized work.
- Pass a final comprehensive examination;
- Submit specialized experience which must meet a strict criterion;
- Receive credit for the demonstration of knowledge requirement.
The MAI Institute also states that its designation program has a lengthy reputation with courts of law, government agencies, financial institutions, and investors. Many financial institutions accept the MAI designation as excellence in real estate valuation and analysis. Some appraisers would say the designation is like having a Ph.D. in real estate appraisals. To read the requirements in their entirety, please visit the MAI Institute website.
Considering Bargain Sale Transactions
With an understanding of the Bargain Sale Appraisal method, stakeholders may consider Bargain Sale transactions as viable. By understanding the Internal Revenue Service process, brokers may realize comparable commissions after educating clients and financial advisors of the Bargain Sale’s approach to dispositions. While nonprofits won’t lose out on opportunities to pursue their charitable goals, the seller may receive higher tax deductions and cash at closing.
Welfont has a wealth of experience with the Bargain Sale. We can help provide answers for your specific property. We are the experts with over 10 million square feet of acquisitions in more than 30 states in the U. S. We are very familiar with the Bargain Sale Appraisal process. We can help you achieve the most in cash and tax deductions for your asset. If you would like more information, please visit our FAQ page or email us at info@welfont.com.
Written by Joseph Garnett, Jr. – Marketing Communications Specialist – The Welfont Group, LLC
The content found on this Welfont.com page is for educational purposes only and is not intended to constitute legal, financial, or tax advice. Please consult your attorney, accountant, tax or another adviser before acting on any information found here.
