To figure what your tax bill is going to be when it is mailed out later this month, find your municipality – for example, Greensboro – and multiply that total rate (1.3699) by the tax value of your property, in hundreds. That is, a tax value of $100,000 would mean you multiply the tax rate by 1000. (If you don’t know the tax value of your property, go to the Guilford County Tax website and pull up your address)

This rate is slightly lower than the 2009 rate of 1.3274

The upshot is, if your house has a property tax value of $100,000, your tax bill this years will be $1,369.90. Last year it was $1,327.40.

It’s rare but not unheard of that property tax rates decline one year to the next. In Guilford County, tax movement in the rate is usually fairly small, whatever direction it goes.

It’s when property values are reassessed that things get really exciting. That is done only once every eight years in Guilford County, so there is the chance for wide differences from one valuation to the next. The next revaluation will occur in 2012.

Hmmm. The same year the Mayan calendar says it’s all going to end.

We should be so lucky, right?

[UPDATE: My friend, the very smart Realtor Candice Joyce, commented on this post with the following:

That’s the rate per $100 of assessed tax value so don’t forget to place a decimal point before last two digits…..or divide value by 100 then multiply by tax rate=same result.

Thanks, Candice. (Math. Ick.)

_____________________________________________________________
The thoughts & opinions are mine. The quips that fall flat are someone else’s. Please feel free to shoot me an email with a question or a good joke.

And remember, real estate agents aren’t bad. We’re just drawn that way.

The answer is: No.

It’s understandable that those of us with active empathy centers in our brains may feel badly, walking through a vacant house that was home to someone and from which that someone was kicked out. But the sad fact is that, whatever damage might be done to the former owner’s credit, state of mind and life situation has already happened by the time you as a buyer walk through the front door. You are not taking advantage of someone else’s misfortune. You are looking at a property owned by a bank.

A bank.

And a bank is about as far from being a sympathetic figure as you’re likely to find in this historically grotesque economic chapter in American history.

If you still feel pangs of guilt, consider this: Buying that foreclosure will remove it from the market, thereby reducing the surplus population. I mean, surplus inventory.

Sorry. All this real estate drama has me in a Dickensian frame of mind.

So, look at all homes that meet your needs. Make your decision on which one rings your chimes, regardless of the circumstance of the seller.

That’s how it’s done.

It would be, unless the closet is in a house that is on the market.

I’ve had more than one buyer client ask if it’s alright to do things like look in closets, try out water pressure, check out how clean the built-in oven is. These are all things that only either the crassest people or our closest friends would do under normal circumstances.

Selling or buying a house is far from normal circumstances. It is a time when total strangers roam through your home. Someone else is trying to visualize their furniture in your living room.

And they want to know if the closets are large enough to hold the by-product of her shoe sickness, his fascination with remote control airplanes and the equipment from the seven sports their two children play at any given time.

So, buyers – go ahead and look. It isn’t naughty.

Sellers – tidy up for goodness sake. While knowing the water pressure might be important, there are some things NOBODY wants to know about you.

The thing to keep in mind for both buyer and seller is that a home on the market is a product for sale. If you want to sell it, put things in order. If you want to buy it, kick the tires, so to speak. Flush the toilet, see if the oven has been cleaned recently – or ever – and look in the closets.

Really. It’s ok.

There are many clocks in our house. From the digital ones on the DVR box, wall oven, under-cabinet radio, alarm clocks for for both Mr. Durango and me to the ones at the bottom of the three computers to the watch our oldest son left here after visiting this weekend – it started beeping at 6:30 this morning – to the grandfather clock in the front hall to the mantel top clock in the den to the cuckoo hanging in our kitchen (the cuckoo CLOCK is hanging, wiseguy) we are covered, clock-wise.

Even so, time can still manage to slip up on us. And it is slipping up on all the 1st time home buyers who haven’t stepped up to take advantage of the $8,000 tax credit. As it is currently designed, the last day to close on a house and receive the credit is November 30th.

December 1st will be a day late and $8,000 short.

Let’s be clear. There is still time to find a home and go through the process and close by the deadline. But if you are hoping to take advantage of the credit, you might want to get going before the new seasons of “Lost” gets started as I understand that show can be quite the time suck.

There is a chance the deadline will be extended. And there’s a chance my youngest will become obsessive about his room being tidy as well. We can continue to have faith, but let’s not bank on either of things happening in a timely manner.

What should be your first step if you haven’t already started towards buying in time for the credit? Pretty much the same as always. Time is just really of the essence in this case.

So, my personal recommendation is to get thee to a good lender immediately. The loan process is what can take the longest in a real estate sales transaction and it can be started before you find the house which can save time. A lender can actually get your loan approved, contingent on whatever house you find appraising at the contract price, before you step foot into the first property on your search list. And the benefit is that the lender will have the information needed to finalize the loan once the house is found and you’ll know your perimeters, money-wise.

Once you’ve established the loan, get with a good agent and start looking at houses. Don’t mess around with looking with several agents. That’s not efficient, not effective and wastes time. You have to get to know each one, answer the same qualifying questions over and over and ultimately that doesn’t serve your purposes.

Find an agent you like and go for it.

Once you find the house, the negotiations will take as long as they take. Perhaps you and the seller will come to a meeting of the minds in a day. Maybe a week. That’s up to the parties. Try not to get bogged down in whether the seller will leave the 15 year old swing set or if the living room is intolerably orange. And if the seller gets bogged down in their own issues, consider moving on to another property.

It’s unpredictable but as a rule, when a buyer wants to buy a house that a seller wants to sell, things get worked out.

So, the countdown has started to November 30th. Here’s your “to do” list if you want to get that $8,000 tax credit:

• Communicate with a good lender and start the approval process
• Establish a relationship with a Realtor with whom you’re comfortable and start looking at homes that meet your needs and price range
• Eliminate those homes from your mind that won’t work. Try to compare no more than two houses at a time and eliminate all the rest. Otherwise, they start to run together and you can’t remember which one had the half bath off the kitchen that skeeved you out and which one had the killer deck.
• Stay on top of whatever your lender has told you she needs to get things completed
• Be prepared to get a bit freaked out. Nearly all 1st time buyer do. You’ll be glad you went through it all once your in your own place.

This is a rare, as in never before, opportunity to not only become a home owner but to receive massive coinage for the privilege of doing so.

It all adds up to this being the time to make that leap and reap the rewards, happiness-wise.

_____________________________________________________________
The thoughts & opinions are mine. The quips that fall flat are someone else’s. Please feel free to shoot me an email with a question or a good joke.

And remember, real estate agents aren’t bad. We’re just drawn that way.

After all the looking at houses, measuring furniture, negotiating repairs and near constant nausea, the real estate buying process always ends up with a document called the HUD-1 Settlement Statement. HUD stands for Department of Housing & Urban Development.  (Here’s a PDF) It is used for virtually all residential real estate closings and details the financial part of the transaction for both buyer and seller.

It is nothing to be feared. Although there are columns and rows and decimal points and subtotals, even those with math phobias can embrace that fact that this is where everything is made clear and specific.

By the time you are at the closing table you should know what your “bottom line” is. And it really is there, at the bottom of page 1. The buyer will have already been advised how much money to bring to closing and the seller will know how much they (hopefully) will net out from the proceedings. [note: Here in Greensboro, closing is customarily handled by an attorney. Other parts of the country may have 'escrow agents' or other 3rd parties.]

Where do the numbers come from?

They start with the Offer to Purchase and Contract which should spell out  financial details of the agreement between the parties:

• sales price
• earnest money paid
• if the seller is paying for any of the buyer’s closing costs and how much
• if a home warranty is being purchased and for how much, etc.,

Added to this is any information not specifically addressed in the contract:

• Was there a home inspection?
• termite inspection?
• repairs made?
• If so, for how much, payable to whom and was it paid outside of closing (“POC”)
• hazard insurance premium
• sales commission

This information is generally provided by the Realtors representing the parties.

The real nitty-gritty information is provided by the lender. The closing attorney will be provided a ‘closing package’ or ‘closing instructions’ by the mortgage lender. The package will instruct the attorney how much money is to be collected and disbursed on the buyer’s side. Here is where the attorney will note how many months of taxes to collect up front and for the escrow account, what expenses have been incurred for the mortgage itself:

• appraisal
• origination fee
• discount points
• flood certification fee
• application fee, etc.,

The closing attorney will also do a deed and tax search to verify which party owes how much for real estate property taxes. The seller is responsible for taxes up to the day of closing and the buyer is responsible for the day of closing through the end of the year. Same thing for homeowners association dues.

After all this information is collected by the closing attorney, all the debits and credits are listed on the 2 pages of the HUD-1. There is a columns for the buyer (left hand side) and a column for the seller (right side).

There should be nothing left off the HUD-1 and nothing added that the lender hasn’t approved. Nothing ‘under the table’. That is a serious no-no.

It is on the HUD-1 where you’ll see a credit in the buyer’s column for the earnest money you paid when you made the offer. (The buyer’s agent will generally bring a check, made out to the attorney, written from the agency’s trust account). Also noted will be a credit for the mortgage itself. Again, funds are wired to the attorney from the bank.

Adding up all the various debits and credits for both sides leaves two bottom lines. One is the amount the buyer needs to bring to closing (certified check payable to the attorney), the other the amount due the seller.

All the funds from the earnest money to the mortgage to the buyer’s day-of-closing money go into the attorney’s trust account. It is from that account the attorney cuts all appropriate pay-outs: seller’s net, tax bill, homeowners insurance premium, termite inspector, etc., At the end of the day, the attorney’s trust account will balance out to $0. Every penny of money that comes in for that transaction goes out.

Both buyer and seller and the attorney will sign the HUD-1. It is the financial record of the deal. You’ll be given a copy.

There are MANY itemized expenses in a real estate transaction and I’ve noted just a few. The thing to remember is that there will be nothing on the statement that doesn’t have an explanation.

If things aren’t clear to you, ask the attorney. Line 1107 will show their fee, so get your money’s worth!

_____________________________________________________________
The thoughts & opinions are mine. The quips that fall flat are someone else’s. Please feel free to shoot me an email with a question or a good joke.

And remember, real estate agents aren’t bad. We’re just drawn that way.

If you did come to the earth with such knowledge, congratulations – I think. But if you’re like the rest of us, I’m putting together a list of real estate-specific terminology that may help. You can find the growing list, and the definition of PITI,  here. Soon you’ll be able to crush a RealEstateSpeak Slam with the best of ‘em.

Today’s term:  Earnest Money

This is money a buyer tenders with an “offer to purchase” for consideration. The buyer need not be truly an earnest person, though it’s nice when it happens. And some parts of the country call it a ‘binder’. It is presented with the offer to show the buyer is serious – or earnest – about the transaction.

There is no required amount. Indeed, there need be no money involved. Technically, the buyer’s good will is sufficient. So one can attempt to make an offer with zero dollars involved.

Good luck with that.

Sellers generally aren’t all that impressed with only a person’s good will. Just sayin’.

[Note: Earnest money, while paid at the start of the transaction, is not the down payment a lender will require. Earnest money is, however, credited towards that down payment. So, if your lender advises you'll need a $5000 down payment to buy in the approved price range, and you pay $2000 in earnest money, you'll need to bring $3000 to fulfill the down payment requirement on the day of closing.]

So how much earnest money should parties to a real estate sale expect to change hands? The amount is, as with virtually all terms of an offer, negotiated between the buyer and seller. A very rough but reasonable estimate is 1% of the purchase price. (example: $1500 – $2000 for a house with a sale price is $150,000) Again, negotiable between the parties.

Buyers should remember that the amount needs to be enough to prove to the seller that losing it would be painful so you’re not likely to simply bail on the transaction.

Sellers should remember that buyers need to be able to eat and pay their electric bill while waiting to close on the house. So the amount can’t be too cumbersome.

[Note 2:( I cannot stress this enough.) The check for the earnest WILL BE DEPOSITED. By NC Real Estate Commission law it must be deposited within 3 banking days of acceptance of the offer. Some have thought the check would be clipped to the file and cashed the day of closing. Having an earnest money check bounce is a less than auspicious start to a deal]

In Greensboro, the earnest money traditionally is held by the real estate company that has the seller’s house listed. (If the property is being sold by owner, I highly recommend a 3rd party hold the earnest money. An attorney is the best bet in that case.) It is held in a trust account and remains there until the closing day, when it’s released to the closing attorney and credited to the buyer’s bottom line as noted on the HUD-1 closing statement.

Hmmm. HUD-1 Closing Statement. I think I just hit on the topic for next week’s Term of the Week.

_____________________________________________________________
The thoughts & opinions are mine. The quips that fall flat are someone else’s. Please feel free to shoot me an email with a question or a good joke.

And remember, real estate agents aren’t bad. We’re just drawn that way.

I’ve seen the lie put to all these, but will focus only on the inspection piece for now.

A common belief of home buyers is that a home inspection is a to-do list for sellers. That a seller is required  to correct all items noted.

This is even further from the truth than the one about cheap vodka.

A thorough home inspection will note all manner of things from lots of cracks in the concrete driveway to the fact that the roof is within a few years of needing to be replaced to faulty GFCI outlets in the 2nd bathroom. And many items will be ones that a prudent buyer will want corrected.

Some are things a prudent home buyer needs to realize are what comes with owning your own home.

And of the repairs one should request, their is no rule or law that says a seller must make them. Repair requests are negotiated, just as are the price and other initial terms of the contract. And, as any seasoned Realtor can tell you, deals fall apart over repair negotiations as often as over who will pay the closing costs.

Now, this is not to say buyers shouldn’t expect the house they’re hoping to own be in good repair before they sign closing documents. It’s just that there is no guarantee that sellers will be willing, or able, to make repairs. If a seller has been beaten down on price and other terms, there may simply be no more blood in that turnip.

How to determine which repairs request are reasonable? The guiding question needs to be “is the system or item performing the function for which it is intended”? A roof may be 15 years old and the case could be made that it is approaching the end of its useful life. But a roof has pretty much one job and that is to keep rain out of the house. If the roof isn’t leaking and isn’t a made up of a bunch of cracked shingles, it’s performing the job for which it is intended.

A cracked heat exchanger in a furnace, on the other hand, needs to be corrected. Leaks, wood destroying insects, dry rot, mis-wired electrical outlets. There’s a smorgasbord of issues homes can have. And one would hope and expect that a seller who wants to sell will agree to do the right thing. Most do.

Some don’t. Or won’t. Or simply can’t.

It is at that point a buyer needs to look long and hard a property and ask if they can handle the issues or if they would simply be buying someone else’s problems.

So inspect early. Ask your lender if she or he can hold off ordering the appraisal – for which you have to pay – until after inspections are completed and any repair requests are negotiated. Above all, try to keep your head although it’s hard to do when going through such an emotional experience.

And don’t play air guitar in front of your dog in your bathrobe. You will be judged. I’ll never get over that look on Piper’s face.

More than concerning them, it sometimes prevents them from moving forward with dreams of buying their own place.

Particularly in the case of first time buyers, the idea of coming up with money for just the down payment seems daunting, forget about money for an attorney, lender fees, inspections and flowers for their agent.

No, wait. That last one is purely optional.

The truth is, closing costs can vary from region to region and will be impacted by the specific circumstances of the purchase. So trying to plan for them when starting the home-buying process can be hard.

A little information might help:

“Closing Costs” are precisely what the name says. They are the charges required to get the house ‘closed’, or finalized with the deed recorded at the courthouse. Both buyer and seller incur costs but the lion’s share are usually in the buyer’s column. If one is paying cash, the closing costs for the buyer will be minimal (attorney’s fee, appraisal if so ordered, deed recording, inspections if ordered, buyer’s share of property taxes for the year).

When the buyer gets a mortgage for the purchase, closing costs go up appreciably. This is because the lender will require certain things in exchange for loaning the money. These items will include charges for things such as loan origination fee, credit report, commitment fee, flood certification fee, mortgage insurance, title insurance, collection of tax and insurance money in advance in order to set up an escrow account, etc.,)

So, getting to the point, how much are closing costs? As a very broad rule of thumb, one can plan on closing costs equaling about 3% of the loaned amount. Here is a partial list of some customary charges in the Greensboro area.

If you’re quickly calculating the numbers and realizing that the minimum amount of down payment one can generally get now – 3.5% with an FHA loan – and adding to that the above mentioned 3%, you may be thinking there’s no way and consider clicking away from this site to go over to see what Perez Hilton has to say about Susan Boyle.

But don’t do it. And not just because gossip is not nice.

When making an offer on a house, a buyer can request the seller to pay for some or all of the buyer’s closing costs. In doing so, the buyer may need to adjust the purchase price amount to make up for the seller paying those costs. But an increase of $3,000 or $4,000 dollars in purchase price will raise one’s monthly mortgage payment a small amount compared to having to come up with those $3K-$4K up front. And if one buys before December 1st of this year, there is the ability to use the $8,000 first time buyer tax credit towards closing costs.

The moral of all this is “Don’t let fear of closing costs stop you from buying a house”.

Talk to a reputable lender and ask about all this. A good lender will provide you with a “Good Faith Estimate” of costs and a really good lender will be able to nail those numbers within $10.

There’s no harm, or cost, in asking the questions about buying a home. Deal with knowledgeable people. Don’t assume only OTHER people can buy a house. Give yourself a chance.

_________________________________________________________

If you have questions, comments or a good joke to share shoot me an email.  I’m a full time Realtor®, I love what I do and would be thrilled to hear from you.

Don’t do it.

Just don’t list a property for sale right now unless you really need to. It will only hurt your feelings. And you risk leaving money on the table if you do get an offer. That’s what happens in a buyer’s market. And there hasn’t been a buyer’s market like this since James Stewart played George Bailey going toe to toe with Mr. Potter. And while life may still be wonderful, being a seller in this market is not.

On the other hand, if you are a buyer – and don’t have a house to sell before you can buy – you should be doing a happy dance right about now. Seriously. Low interest rates, tons of inventory and, if you’re a 1st time buyer, the government will throw $8,000 at you to get you off the fence.

So get off the danged fence already!

The total number of houses on the market in Greensboro are down from last week. But that’s due to the fact that pending properties tend to close at the end of a month. So, while lower inventory is good, in relation to the inventory after end of month closings in January, we’re up.

Ugh. We’re just going to have to get through the houses on the market. Only then will there be what can really be considered a turn around.

Inventory is still quite a bit lower than in was in the 4th quarter of 2008. But we need to see month over month numbers improving.

Here are the numbers for properties on the market in Greensboro.

As always, whether the news is good or bad, you’ll see it here.

_________________________________________________________

If you have questions, comments or a good joke to share shoot me an email.  I’m a full time Realtor®, I love what I do and would be thrilled to hear from you.

* All data from Triad Multiple Listing Service (MLS). “Single-family” does not include Duplexes or manufactured homes.

I’ve resisted writing about this very important tax credit because it has changed several times since introduced a few weeks ago as part of the economic stimulus package. Now that President Obama has signed the package into law, let’s take a look. For those who want a quick read, here’s a PDF of the new tax credit compared to the one from last year.

Nuts & Bolts:

• 1st time home buyers – or those who have not owned a home in the past 3 years – are eligible
• it’s good on single-family, townhouses and condos
• it does NOT need to be paid back (this differs from the previous credit)
• there are income limits
• purchases made between 1/1/09 and 12/01/09 are eligible***[SEE COMMENTS]

Now, some VERY basic explanations. For complex answers, ask a deeper thinker or, better yet, a tax expert.

A tax credit is different than a tax deduction. A tax credit is a dollar for dollar reduction in the amount of tax burden (what you owe in taxes). A tax deduction reduces your amount of taxable income on which your tax burden is calculated.

So this tax credit means that if at the end of the year your tax burden is, say, $8,000, and you receive the $8,000 tax credit  because you wisely purchased your 1st home, you will owe ZERO dollars in federal tax.

If your tax burden is $5,000 and you get the $8,000 tax credit, you would receive the difference. $8,000 credit – $5,000 owed = $3,000 in your pocket.”

Some are bellyaching that this is not a a true stimulus for home buyers.

I guess those folks don’t look at $8,000 as real money. Mazel Tov to them.

There are plenty of 1st time buyers who will be more than thrilled to get $8,000 credited to them come tax filing season next year. And that’s in addition to the benefits of the mortgage interest payment tax deduction on those same returns.

Consider this as well – When those tax refund checks start going out in the spring, there will be a whole new generation of homeowners, with houses to furnish, decorate and all that comes with owning your own place.

Sounds stimulating to me.

When you look at this tax credit, the low interest rates, the motivated sellers and high inventory it’s hard to imagine a better time to buy.

As I’ve repeated many, many times, most people are having to pay to live somewhere. And those renting are indeed paying for a mortgage. Just not theirs. And they’re not getting the benefits of it.

Time they started reaping those rewards themselves.

[BTW, the president is announcing a separate plan of those who currently own homes, The Help for Homeowners Plan. I'll write about then when there's complete information available. The White House has a link to it here.]