Rosen Properties Real Estate Blog
Plan Your Tax Attack
December 14th, 2010Good news for Americans facing eye-popping property taxes: You can fight city hall, or whichever government body sends you this annual economic albatross.
When real estate boomed, property taxes often followed suit. So why aren’t they dropping now? First, local governments may go for years between re-assessments, so lower values may be overlooked.
Also, a blanket reduction in assessments would mean less revenue for local governments at a time when most are strapped for cash.
The National Taxpayers Union estimated earlier this year that up to 60 percent of the country’s real estate is assessed too high. Here’s how to make sure you don’t pay too much.
Know Where to Go
While getting your property taxes lowered is neither easy nor automatic, countless homeowners have swayed their assessor to lighten the load. However, success is up to you. Tax assessment varies across the country. So, start by learning exactly how your tax is totaled.
Next, it’s critical to closely review your bill for any obvious mistakes. It should show your assessment and taxes from last year and this year. If you find an error or feel you’re being overbilled, you have a couple of options. One is to go directly to the assessor’s office; you can probably go without an appointment. If you’re lucky, you may get a reduction right away. Or, you may be told you have to file a petition for a hearing before a magistrate. Before you go to a hearing, roll up your sleeves, do some research and perhaps even hire professional help.
One of the first things to do is to make sure the government has the right specifications for your property. These include confirming things such as the square footage under roof and the lot size. They’re not always accurate, says Michael Mila, a Chicago-area real estate appraiser who owns Chicago Appraisals LLC and operates the website TaxAppealGuide.com. Often, the assessor may have simply looked at the outside of your house before rendering judgment.
“One of my clients had a one-story home with vaulted ceilings,” Mila says. “They assumed the height reflected two stories, so they charged her for double the living space. She brought the sketch to the assessor’s office and wound up saving $1,000.”
You should have received a floor plan and boundary survey when you bought your house. Use them to determine your dimensions. A surveyor or engineer can help you here, but the cost will be $200 to $1,000, depending on the size of the property.
Locate the Problem
You’ve heard it before: The three most important factors in real estate are location, location, location. So one way to prove you’re paying too much in taxes is to demonstrate what’s wrong with yours. When factors outside the property’s boundary bring down its value, this is called external obsolescence by tax assessors. If you’re so close to a runway that pilots wave to you, or your backyard has a crossing signal thanks to the train tracks on your lot line, make the case that you have external obsolescence.
But what if the rest of the neighborhood has the same issue — say, a nearby town dump that doesn’t pass the sniff test — and roughly the same assessment? Make the case that your situation is worse. Maybe your house is next to the noisy public playground or adjacent to a parking lot for local school buses.
“You need to let the assessor know ‘I’m not like the rest,’ and ‘My location is inferior to others around me,’” says Mila.
His suggestion: Pretend you’re a buyer looking for an excuse to lowball a bid on your home.
Give Dysfunction a Function
Is your house haunted by a bad layout? Good news: That may mean lower property taxes.
Quirks inside the home are called “functional obsolescence,” says Steven Housman, president of Property Tax Experts Inc., a property tax consultant firm in Hollywood, Fla. A simple definition of functional obsolescence is: homes with features that are neither practical nor desirable. For instance, do you have to walk through a closet to get to a bedroom? Does your four-bedroom house have a one-car garage?
Functional obsolescence will make your home less fun to live in and therefore, less valuable when it’s time to sell. But the upshot is that these quirks may increase your odds when challenging your property assessment.
Keep Up With the Neighbors
Did you buy your home when prices were at record highs? Did you get re-assessed right before the property bubble burst? Then your taxes might also be inflated, particularly compared to your neighbors’ rates. Research online what everyone on the block is paying, and see whether your bill is in line with the comparable properties, says Mila. Check for the taxes on similar houses that have recently sold. If the compared tax prices are off kilter, print out your research and go to the assessor’s office with the evidence. “If you’re higher than the norm, something is wrong,” says Mila. He says the No. 1 reason challenges get rejected is homeowners don’t have their documents in order.
Hire an Appraiser
We all feel we should be paying less property tax, but obviously we have our own interest at stake. You need to demonstrate the objectivity of your opinion. And for that, it’s best to hire an appraiser. An appraiser is different from a surveyor. The appraiser’s role is to estimate the value of the property. Don’t rely on free services from online companies that purport to give market values in your area.
Assessors have been known to throw them in the trash. The assessed value should be roughly equal to the appraised value. A third-party opinion bolsters your credibility..
Appraisers are state-certified and in most areas, they have professional associations you can contact for referrals. The cost is $300 and above. Some homeowners go an extra step and hire an attorney, but before doing so you should balance the legal fees you’ll incur against any taxes you’ll save.
Is Owner Financing Dead in Regards to the New SAFE ACT?
November 26th, 2010
You may have been hearing news recently about the SAFE ACT that became effective October 1, 2010. Maybe you are a real estate investor who is using a “mortgage assignment” technique as a way to make money. Be very careful how you use this method of investing. The gist of the SAFE act is that if you sell a property with any kind of seller financing, you will be breaking the law if you aren’t licensed to do so.
Let’s first realize that “Seller financing” is alive and well. However, there are somethings you need to do to protect yourself. You must understand and know how to structure deals if you DON’T have a mortgage license.
Here is how I understand the new Federal S.A.F.E. Act in regards to “selling on terms”
Land contracts do not fall under the SAFE ACT requirements since legal title in a land contract does not pass until the end of the payments. With seller financing, the difference is legal title passes from seller to buyer at closing. If you want to sell a property under a land contract, there should be no legal issue.’
If title does not pass from seller to buyer, it is not subject to licensure. Similarly, a lease with an option to purchase or other agreement where title does not pass is not subject to licensure.
A seller will be exempt from this Act if:
1.) Owner is selling own residence vs. a rental property;
2.) If the seller never lived in the home (investor), seller is still exempt if the property is being sold on a land contract or lease with option;
3.) If title does not pass, owner is exempt.
In summary, what does that mean to you as an investor?
If you are taking over a mortgage “subject to” and then assigning it , you will get in trouble.
If however, you take out an option to sell the property on a Lease Option or a Land Contract, you will be okay. You should no longer sell a property “subject to” if you are not the owner residence of that property. So REMEMBER THIS …. Don’t sell “subject to”!!! You BUY “subject to” and then sell with a Land Contract or Lease Option.
I am not a lawyer and you should check with your own local board of Realtors to find out what they think.
It’s About People, then Houses, then Investment
November 23rd, 2010Ever wonder why most real estate agents focus on consumer market rather than the investor market?
It’s all about their mistaken belief that the best and surest way to a big payday is by identifying a seller, listing his property and then finding someone to buy that property at a price that will generate the highest commission. Even better if the agent happens to represent both the buyer and seller and won’t have to split that commission with someone else (although such dual representation is not legal in all states).
The quicker the transaction happens the better, so the agent can identify another home for sale with a potential big commission, and the cycle repeats itself. Again and again.
What’s Wrong With This Picture?
First of all, it’s about selling homes first and serving people second, all the while trying to maximize commissions. It totally disregards the potentially bigger commissions that an agent can make by understanding and serving the investor-buyer.
Investors require a different degree and depth of attention from an agent than does an owner-occupier. The investor represents problems for many real estate agents who “don’t do (investor) math”. Many agents also assume that investors want deep discounts and take too much time to make up their minds. This due diligence is often mistaken for indecision, and it is something most real estate agents are not trained to support.
This is not to say, however, that there are no expert real estate professionals who serve investors effectively. They do exist; it is just that they are the exception.
Relationships or Transactions?
So where do the potentially bigger commissions come in? It’s all in the math. Most homebuyers buy or trade up homes once every five to seven years, which makes repeat business distant.
A relationship with a serious investor, on the other hand, can be recurring and generate three to four times the commission revenue that an agent recieves from that one homebuyer transaction over the time that the average owner-occupier holds one house. The active investor does 10 to 15 times the number of transactions in the same period.
Then the relationship gets more interesting because most successful investors are connected to a network of additional prospects and investor-friendly providers. For examples of how the homebuyer and investor markets differ, see the table below.
| 11 REASONS WHY REAL ESTATE INVESTORS ARE ALWAYS A GREAT HOME SALES MARKET FOR REAL ESTATE AGENTS* | ||
| Client Difference | Home Buyer | Investor Buyer |
| 1. Client Universe | Local | National |
| 2. Market Reach | Regional Homebuyer | National Investors |
| 3. Typical Prospect Pool? (Est.) | 5% of reg. population | 100% of national investors |
| 4. Market Requirement | Neighborhood home | Solid investment returns |
| 5. Decision basis | Home – location | Return on investment – location |
| 6. Due Diligence Process | Personal appeal | Investment/return/cash-on-cash |
| 7. Purchase frequency by satisfied client | 1x every 5 to 7 years | 1 to 2.3 homes per year |
| 8. Commission per transaction | 3% – 6% | 2% – 6% |
| 9. Median ’09 price = $175k* | $5,250 x 1 houses/5 yrs | $3,500 @ 1 house/yr x 5 yrs |
| 10. Gross commissions/yr x 5 yrs | $1,050 | $3,500 + |
| 11. Total commissions/client | $5,250 over 5 years | $17,500 + over 5 years |
| (*if you know how to serve them) | ||
Fundamentals & Technicals
These deals do not come from the traditional “Honey stop the car,” open house, curb-appeal sales pitch. Investors can make decisions far more rapidly than most homeowners, as they are looking at the numbers, the investment and the exit scenario.
Historic home sale trends are pretty clear. According to the National Association of Realtors 2009 Second Home and Investor Study, slightly more than 20 percent of the home sales in the United States are made to investors. Our 2008 The Invaluable Investor Study placed this number at 28 percent. The NAR held at 21 percent for that year by analyzing mortgages.
Total investor sales for 2009 is not record setting, but it is among historic lows. Going forward, sales are expected to be a constant percentage of the market. As the market grows, so will this transaction volume.
Real estate is on sale, and an investor can buy positive cash flow inexpensively. This has not been lost on sophisticated investors or investment managers.
Suddenly Faced With Settling An Estate?
October 8th, 2010If you’ve just been through the trauma of losing a loved one, the last thing you need is the nuisance of dealing with all the estate details. You shouldn’t have to worry about selling a house that is in probate.
Maybe the house needs repairs, or is behind on payments. Where are you going to get the money to bring everything current? Often, the most frustrating piece of settling an estate is selling the house. And you carry the responsibility for it in the mean time.
Contact Us Now! We’ll help you through this difficult time.
We Can Help Settle An Estate
The fact is you already had a life before all these extra “estate” responsibilities came along. If they could all be solved quickly, that would be one thing…but unfortunately, the probate process for estates can drag on for months.
Let us help, by giving you real estate options. We’re expert at solving real estate problems quickly and fairly. That way, you can put these sudden complications behind you now, and focus on what counts–your family.
Banks vs. Trees
July 16th, 2010I heard a story today about a real estate investor working on a rehab in a state different than where he lived, I’m not sure but I think it was Florida. The state is irrelavant to my story but the law mentioned made me think.
This investor wanted to cut down a tree to improve his curb appeal until he found out that local law required anyone cutting down a tree is then required to plant 3 trees… Wow, stiff but I like it! Needless to say the investor opted to simply trim the existing tree.
I really think that banks, in particular those banks working on foreclosures, short sales and loan modifications, should be required to plant 3 trees for every file worked on and not approved. I’m currently working on 3 loan modifications. I’ve had to refax the same documents multiple times because… maybe the T’s weren’t crossed correctly? Then I call back the following week to follow up only to find out that I have to resubmit UPDATED docs because the first set is now outdated.
These institutions should be held accountable somehow for their wastefull practices and pure neglect for our natural resources not to mention the huge waste of the consumers resources… it is simply idiotic! I have confronted them about this and they reply that they are completly electronic… they obviously don’t realize that the consumers are not typically as electronic as a billion dollar bank… we need to print a hard copy in order to fax it in! And, they won’t except emails you have to fax it in!
They should have to plant 3 trees for every file they start and don’t approve!
Has Your Real Estate Agent Failed To Deliver?
May 24th, 2010When you told your real estate agent that you needed to sell your house, you probably heard great stories about how it would sell in no time, at a great price.
But, that’s NOT how it’s worked out. Instead of hearing great stories, now you’re hearing great excuses for why your realtor hasn’t sold your house: “It needs more bedrooms; you need to come down in price; the school district isn’t the best”, etc.
Contact Us Now! We’ll act quickly to give you a real solution.
We Can Buy Your Home Fast, Your Realtor Can’t
At this point, what you really need is to sell your house now. That’s where we come in: We aren’t interested in listing your house again; we want to buy it! We are professional real estate investors – not real estate agents. We’ve built our reputation over the years for quick action and fair prices. We can often give you even more than one solution to your problem.
You just want an honest, fair way to sell your house, without realtor excuses. That’s exactly what we’ll provide.
Contact Us | Complete the Seller Request Form
Freddie Mac’s New Take On Short Sales
May 6th, 2010Short Sale Flip Fraud – The newest problem in real estate is not yet a law or an official policy, but it is definitely going to create issues in the market. The news from Freddie Mac on short sales could cause serious legal and practical issues for real estate investors.
The organization posted a new educational article on April 16, 2010 titled “Emerging Fraud Trends: Short Payoff Fraud.” Essentially, the article stated that a short payoff or a short sale can be considered fraudulent if the lender agrees to a short sale that already has a third-party buyer in place that is paying a higher amount than the agreed-upon loan payoff amount. This is a serious yellow flag for short sale investors who make their living negotiating good short sale deals with banks, then selling their new properties to other buyers for a profit.
The article described scenarios and red flags for short sale payoff fraud. The scenario revolved around a short sale facilitator who set up a deal with a lender to purchase a home worth 80K for 70K while the lender took a 30K loss. The facilitator does not let the bank know that he already has a buyer ready to pay 95,000 for the property. The second the facilitator puts his profits in his pocket, Freddie Mac considers him guilty of fraud because his negotiations caused Freddie Mac to ultimately take a “larger than necessary” loss on the sale of the property.
The article urges buyers, sellers and lenders to be on the lookout for short payoff fraud red flags. These flags include sudden borrower default, a borrower who is current on other obligations and the buyer of the property being an entity rather than a person. The article also tells readers to keep an eye out for resale options in their purchase agreement.
Everyone involved in a short payoff is encouraged by Freddie Mac to report potential short payoff fraud the second they become aware of a second purchase contract for a higher price. This may not yet be a law, but the signs are not good when Freddie Mac has posted such a direct attack on short sale investors.
Your Most Valuable Asset
April 18th, 2010In business your most valuable asset is your reputation. If people know that they can count on you they are more apt to do business with you. It is the leverage you can use to propel your business. But just like financial leverage, it cuts both ways. As much as a good reputation helps, a poor one hurts.
There is one word that sums it all up: INTEGRITY
The dictionary defines it this way: Integrity – adherence to moral and ethical principles; soundness of moral character; honesty.
Experience comes with time. A track record of success isn’t obtained overnight and wisdom comes by learning from your mistakes. Integrity is the one thing you can have right now. There is no class to take, no test to pass. You can have it when you get out of bed in the morning. However, you must choose to have it.
Real integrity is doing the right thing, knowing that nobody’s going to know whether you did it or not. - Oprah Winfrey
This is a portion of a blog post by Richard Warren
Fed Stopped Buying Mortgages
April 16th, 2010As of March 31, 2010, the Federal Government stopped buying mortgage-backed securities.
Which means…?
Well, the way these mortgages are often bought and sold is by being bundled together into mortgage-backed securities. Institutions such as pension funds, hedge funds, banks and investors then buy these large pools of mortgages. Once the financial crises hit and the sub-primes began collapsing, it became harder and harder to sell these pools.
Compounding the problem, as the market began to slide, these same institutions began racing to sell off their packages which threatened to make the recession even worse.
In an effort to slow the values decline, the federal government began buying up these packages. By early March 2010, the Fed and Treasury together became the largest mortgage-backed security investor in the world. They have purchased more than $1.2 trillion dollars worth even though, as with any home loans, they come with some risks.
So far, their efforts to control the slide have worked. Interest rates dropped for millions of homeowners which, of course, helps our economy. It appears that the government is currently making money on the loans they hold.
So, what happens now that they’ve stopped buying? We’ll soon find out. Predictions are that, to begin with, interest rates will climb.
Many analysts believe that, without this government intervention, the housing market would have “imploded” and we could have actually entered into a financial depression.
Bottom line, should we be grateful for the governments efforts to prop up our housing market?
Opinions?
Selling Your House Because Of Fire Damage?
March 16th, 2010One moment your property is fine, and the next it’s up in flames. Even if everyone got out OK, it’s still a tremendous shock. Your property is ruined, your possessions destroyed.
If that’s not enough, now you have to deal with city officials, insurance adjusters, contractors that never show up.
Contact Us Now! You’ll be pleasantly surprised at the solutions we can present to you for your damaged home.
Help For Your Damaged Home
If you’re seriously considering selling your house, you need someone who can look beyond the fire damage, and see the value that you once had in the property.
We’re professional investors that can do just that. We know how to fix damaged properties for far less money than what contractors will tell you–and we buy houses for more than you thought possible.
Contact Us | Complete the Seller Request Form