Tax Value vs Market Value

Posted on May 6, 2012 by

Q. Yvonne, I’m researching a house I would really like to buy. But the tax value is not any where near the sales price. Should I be concerned?

A. Looking at real estate tax value for an individual house is irrelevant because that is just a snapshot of value. As you know, the market value of a house always changes. For example here in Raleigh, NC, the tax assessor determined the tax value of our Wake County real estate in early 2008. Of course, our market value has changed greatly since then. So, an individual house’s tax value is rarely the actual market value.

Having said that, I can tell you that comparing tax values can be very useful. The tax value is very helpful to use to see trends in neighborhoods.

Some Raleigh or Cary, NC neighborhoods have significantly increased their market value compared to their tax value. Some are selling for 125% or more of their tax value (Average tax value $350,000. Average sales price $437,500). This is a good sign this neighborhood is still appreciating nicely compared to 2008.

Other neighborhoods are selling for around 100% of their tax value. (Average tax value $425,000. Average sales price $425,000). These neighborhoods have weathered the storm. Prices may have fallen over the course of the last few years, but the price is recovering and now holding steady.

Some neighborhoods, particularly ones in the upper end price point are seeing homes sell for 70% of tax value. (Average tax value $1,539,000 vs Average sale price $1,077,300). If you are looking for a home in this price point you are in luck! There are Raleigh and Cary communities that have beautiful million dollar homes at bargain prices.

So, Wake County, NC tax values can be useful in establishing the trend patterns for neighborhoods. But I would absolutely caution you about looking at individual home tax values. You don’t know if the owners appealed their tax value or if the home has had some major upgrades since 2008. Remember this tax value was simply a snapshot of the tax assessor’s appraisal in early 2008 (for Raleigh, NC real estate). Look at the snapshot from a “big picture” point of view and you can see how a neighborhood is doing – and find some bargains.

Visit www.BestRaleighListings.com to search for all homes listed for sale in the Raleigh area. Or contact Yvonne directly at yschaefer@kw.com or 919.624.6055

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Q. Yvonne, a friend told me that Obamacare has a hidden tax on real estate sales that goes into effect after the election. Is this true?

A. There is a provision in the Obamacare bill which begins in 2013 that requires an additional 3.8% tax for those homeowners who have a capital gain of over $500,000 (couple) or $250,000 (individual). If someone were to sell their home and receive over $500,000 in profit from the sale, they would be required to pay not just the Capital Gains tax but also a 3.8% Medicare tax. This tax would not be 3.8% of the whole amount, just the amount that is over $500,000 (or $250,000 for an individual).

Would this extra Medicare tax effect most Americans? Certainly not in this particular real estate market. However, it is important to understand that once a bill like this is in effect it is much easier to simply change the amounts. In addition, if there were ever a time that the Capital Gains limit is lowered it would effect this hidden bill.
While it is very important to keep tabs on what is happening at the Federal level, it is even more critical to watch the local government bills. Did you know that in 2007 a NC Bill was passed that allowed each county to enact real estate transfer taxes? It took four years (April 2011) for the NC voters to repeal this authority.
So, the long answer to your question is – Yes, we need to watch the government like a hawk because it is very easy for a bill to be passed (locally and federally) that directly effects real estate transactions.
And, yes, the Obamacare bill does have a real estate component that can effect homeowners with a very large amount of equity.

To search all the homes currently for sale in the Triangle area, go to:

www.BestRaleighListings.com or www.RaleighBargainHomes.com

Posted on January 30, 2012 by | Leave a comment

Foreclosure Rates in North Carolina

Posted on December 23, 2011 by

North Carolina foreclosure filings are down 34% compared to this time last year. Many counties throughout the state reported only one or two foreclosures for 2011. Understandably, the more populated areas have a much higher rate. For example, Wake County had 323 foreclosed properties in 2011. That is still well below the national average. With interest rates and prices so low, now is the time for anyone who has a bit of money socked away to invest it in real estate.

http://www.realtytrac.com/trendcenter/uiservices/heatmap.aspx?width=640&a=Ot3Pef4g%2bRunsgJa2006XA%3d%3d

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4 Tips for Interviewing Agents

Posted on September 27, 2011 by
You decided to buy a house and now you’re ready to interview buyers agents. Yes, I said interview agents. This may be your biggest financial decision. You want to have someone you can trust and feel comfortable. So, you’ve looked at their website, you’ve googled them and now you’ve got an appointment to meet them.
How do you know if they are the best agent for you? Here’s a few ideas that might help you.
1) If the Buyer Agent agrees to meet you for the first time at a certain house, they may not conduct a thorough Buyer Consultation. Yes, I know it is convenient for you to have them show up at the house. But, a Buyer Consultation will allow a good agent to find out details about your goals which will help you save time and money in the long run.
How would you feel if you made an appointment to see a doctor for the first time and they were ready at the door with pills or a scalpel. Don’t you expect them to take your medical history and hear what’s causing you to call them? A good Buyer Agent will work hard to get inside your head and find out exactly what you need.
When you find an agent who wants to meet you before showing you homes, you’ve found someone who is willing to invest time in your home buying experience. And that’s what you want, right?
2) A Buyers Consultation will also help you get to know the agent to see if they are a good fit. They should be willing and able to answer questions like these:
     - How long have you been in real estate?
     - How many houses did you sell last year?
     - How many buyers are you currently working with?
     - What’s your average sales price?
     - Did you have a career before real estate?
3) You will also want to know what kind of support and systems the agent has on their team.
     - Their team should include: Lenders, Inspectors, Contractors, Insurance Agents and Attorneys. They should be able to give you contact information for their team at this first consultation.
     - They should have administrative systems to keep track of contracts and scheduling. Do they have papers falling out of files and seem scattered? Or do they have technology to help? Some agents (myself included) have systems that allow you to sign contracts online, making the purchasing process much easier for you. Don’t be afraid to ask how they will handle your contracts.
4) How well do they know (or follow) the rules? Here’s how you can tell:
     - Do they show you a document that explains how real estate agents work? Do they ask you to sign this document? If not, they are not following license requirements. Beware!
     - Do they ask you to sign a document that allows them to work as your Buyer Agent? They should be able to explain to you that this document PROTECTS you. If they agree to show you houses without getting your permission to work as your Buyer Agent, Beware! Feel free to contact me so I can explain why this is so important to you.
     - Do they ask you for a letter from your lender, or get you in touch with a lender, before they show you houses? If not, they are not doing all they can to prepare you for the home buying process and can cost you a lot of time and emotional trauma.
Tune in next time for a common mistake buyers make when buying a new home.
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Be Careful What You Say

Posted on September 21, 2011 by
It makes sense. You see a house that you like in one of your favorite neighborhoods. There’s a big FOR SALE sign in the yard. What could it hurt to call the phone number on the sign? Well, it could cost you thousands of dollars.
This is a very common mistake buyers make when they first start looking for a home. It is important to realize that, when you call the number on the sign in the yard, the person on the other end of the phone is working FOR THE SELLER. It is their job to get as much information from you as possible during that initial call and then they are required to pass all that information on to the seller. A simple conversation may appear to be unimportant to the buyer, but it could give the seller an unfair advantage should you enter into negotiation to purchase the house.
Things to avoid in the conversation are:
  • How much you want to pay
  • What kind of financing you will have
  • Where in the financing process you are
  • Your plans for the move
  • If you have a house to sell
  • When your lease is up
  • Why that particular house appealed to you
  • Any other piece of information that gives the seller information about your motivation and qualification.
So, what to do? Luckily, you can safely search for homes or get vital community details without any of these concerns.
When you first think about buying a home, the best thing to do is to find a buyers agent even before you begin the searching process. A buyers agent works FOR YOU.  In my next blog I’ll tell you the best ways to find a buyer’s agent and in future  one I’ll give you some questions to ask the agent so you can make sure they are a good fit.
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Golf Tournament October 4, 2011

Posted on September 15, 2011 by

Come join in the fun and raise funds for the Health Center in Guayaquil, Ecuador. 

Golf Tournament
Crooked Creek Golf Course
October 4, 2011
Scramble time: 9:30 a.m.
Cost: $70 per golfer 

Make up your own foursome or join a team on the day of the event.

Prizes include cruises, vacations, and $5,000!

Proceeds from this event will be used to support the 2012 operational budget for the HCI Health Center. This Health Center is the only completely free medical facility in a city of over 3 million people. Patients receive free medical consultations, free medications and free health education.

Registration Form

Hands of Compassion International is a registered 501(c)3 organization in the US and a registered NGO in Ecuador.

Questions about the Golf Tournament? Contact Vicki Harry atvicki.harry@yahoo.com

Question about HCI? Contact Board of Directors President, Yvonne Schaefer at yschaefer@kw.com and visit http://www.handsofcompassioninternational.org/

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That was terrifying!

Posted on September 14, 2011 by

My three month old grandsons got their first set of vaccinations last week. They live with me — along with their dad (my son), mom and 3 year old sister. So, getting their first shots was a family affair.

What I didn’t realize was how scary giving them fever reducing medicine was going to be. Because of the recent deaths from overdosing acetaminophen, there is a lot of confusion about what to give infants to reduce their fever or pain. It took several calls to the doctor’s office and visits to the drugstore before we finally figured out what to give our poor screaming twins.

We discovered that the old “infant drops” is almost FIVE times more concentrated that the “suspension”. That’s why unfortunate parents have given too much medicine to their toddlers. It’s counter-intuitive.

Imagine your toddler has a fever and the only acetaminophen you can find in your medicine cabinet is some “infant drops”. I can certainly see how parents wouldn’t even think twice about giving the toddler the infant medicine. It just wouldn’t make sense that it would be FIVE times as strong!

It just brought home to me that sometimes what seems like the natural thing to do can be completely the wrong thing to do. Only working with a professional (like calling the doctor’s office) clears up the confusion.

I talk to so many buyers and sellers that are taking actions that seem like the right thing to do only to find out that the choice they made wasn’t in their best interest. So, over the course of the next few days I’ll be writing a series of blogs about common mistakes I see buyers and sellers make on a regular basis.

While real estate mistakes aren’t quite as terrifying as potential dosage mistakes for your children, your home is quite possibly your largest financial asset and making mistakes can have far reaching and long term results.

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