Real Estate Investing

It’s great to deduct the interest of your mortgage payment at tax time!  At other times, it’s pretty hard to swallow what the tax assessor says your home is worth.  I’ve listened to buyers complain that their tax assessment is too high, “What do you mean I have to pay city AND county taxes?” and “This is ridiculous! My home isn’t worth that!”  I’ve also fielded calls from buyers who were irritated because the assessment of their home was too low, “Has my home lost that much value this year?!”  Actually, I’ve had more calls from people upset at lower tax rates because they automatically believe their homes are worth only what the assessor says.  This, of course, is not true… a home is worth what the market dictates it’s worth.

(And I prefer a lower assessment so my taxes won’t be as high.)

Meanwhile, if you’re really unhappy at the government’s interpretation of what your home is worth, you should read this story found in Trulia’s Carnival of Real Estate.  Real estate writer Cliff Jacobson told how to challenge the tax assessor and his story was picked up by the mainstream media.  A reporter contacted him and the resulting story made the front page of the Rochester Democrat and Chronicle.

Cliff did some research on behalf of his fiance’s mother and wrote a helpful piece about how to lower your tax assessment.  His tips include,

One way to have your assessment lowered is to challenge the description and features of your home. Make sure the square footage, lot size, number of bedrooms and bathrooms and garage size are correct. Might the assessor be counting unfinished space in the basement or garage; or improvements you don’t have? Document with pictures when and where possible.

The other tips offered are sensible and smart, so read the whole piece.  He wrote a second piece about the lessons learned from challenging assessments in his own community.  His third piece was about the how his challenge succeeded.  He highlights that in preparation his strategy was:  1) Information 2) Comparables and 3) Condition.

In my own corner of the world, our local county commissioner called me several days ago regarding a discussion on our community blog about tax assessments.  There was confusion that he wanted to clarify so I offered the opportunity for him to submit a guest column about the subject.  He did.

All this talk of tax assessments reminds me of the “How [fill in the blank] views your home” joke.  A sample:

How You View Your Home

How Your Lender Views Your Home

There’s more and it’s funny!

I want to preface this by saying that I have worked with many really fabulous lenders in the five years I’ve been in real estate.  My favorites are the ones who are no-nonsense.  If they can qualify someone, they do.  If they can’t, they say that they can not up front without any pain and suffering of disappointment, discouragement, or near-misses in-between.

Sometimes bad lender CAN close on a mortgage, but often they don’t make it easy or desirable to work with them again.  Here are some of the tell-tale signs that you perhaps stumbled upon a bad lender.

1. Your agent sucks in air through their teeth when they hear the name of your lender.
2. You are told that bad credit is not a problem.  They’ll figure out how to find you a loan even though your credit is so bad you wouldn’t give yourself a loan (you’ve never paid a bill on time).
3. When you compare the bad lender’s good faith estimate to that of other lenders, there are *interesting* administration fees that can’t be explained.
4. You have great credit, good job, and are completely eligible in every way.  Yet the lender quotes you rates higher than another lender, higher closing fees.
5. You have a clear to close and tell the lender the date you want to close.  However, your words are not heard.  As a result, you close two days after you requested closing date*.
6. The lender uses the mirror test to qualify someone for a loan (”Are they breathing? We’ll git ‘em a loan!”)
7. Lender will not return your phone call to keep the agent nor the client informed about what’s going on.
8. Seems to work on the loan the day before closing.
9. The lender encourages you to lie on his loan application and credit “is done all the time.”  This is not done all the time and, in fact, is fraudulent lending.
10. The lender is using high-pressure tactics with you, urging you to sign now.

I highly recommend that if you’re considering a home purchase, find a lender in your own area - not one giving you a loan from a thousand miles away.  You want a lender that you can sit eyeball-to-eyeball with to review your good faith estimate in a way that’s understandable and professional.

Here is a link to Lenders Haven which has some really great lending advice.  Or don’t forget to visit the mortgage side of Banks.com for more interesting articles.

*Can you tell I’m not very happy with a lender today? 

In a class this morning, Mimi from our auction team was asked by another agent about how to conduct an eBay auction for a house.  Mimi’s answer was very eye opening, “You don’t.”

Her colleague Dale further explained that unless you’re the actual owner of a house, real estate agents can not auction homes on eBay unless they are licensed by the state as auctioneers.  Real estate broker Tom from St. Louis, Missouri says on the Homes & Agents site that you only have to be a licensed real estate agent to sell homes through online auctions, so this points to rules varying from state to state.

I suspect you could auction a mobile home - without the land - because it’s considered personal property rather than real property.  For example, if a seller calls me who lives in a mobile home park to list their trailer, I could not because Realtors sell LAND and any house or building on it is considered an improvement that adds value to the land.

Overall, regular real estate auctions are picking up.  Douglas Heddings of True Gotham Real Estate Blog says,

They key once again to creating the perception of value is to aggressively price the property to appeal to a larger pool of buyers.  A tricky task in today’s less heated market. 

In today’s less heated market, everything is a tricky task - from finding the right marketing strategy to pricing to figuring out how to compel a buyer to offer a fair market price when they’re under the perception that sellers are giving their homes away in a buyers’ market!

Meanwhile, I visited the real estate auctions on eBay.  In one hour, 47 minutes, the bidding will be over for a home in Flint, Michigan.  Current bid: $5300.  Two bedrooms, one bath.  “Great investment property.”