I am now posting questions that I am asked in case others have related inquiries. Below I have listed frequently asked questions related to property taxes. If you are curious about a different subject, please feel free to post any questions to my blog, or you can call, text or email.
Is there a centralized location to obtain property tax information?
The county offices of the Assessor, Auditor-Controller and Treasurer-Tax Collector created a website to assist the public with general information concerning property taxes. Visit at: http://www.riversidetaxinfo.com/riverside_faq.asp
How can I obtain a copy of the tax rate book?
Copies are available for $35.00. Please click here for a link to the form to be filled out and mailed in with your check payable to:
Riverside County Auditor-Controller’s Office
P.O. Box 1326
Riverside, CA 92502
How are property taxes calculated?
Property taxes are calculated by multiplying the assessed value by the tax rate. For property held primarily as the residence of the taxpayer, a value of 7,000 for a homeowner’s exemption may be deducted from the assessed value to arrive at the net amount subject to property taxes. To obtain the homeowners exemption click here for more information.
What does a Tax Rate consist of?
In California, the property tax rate is set at 1%. This rate is constant as guaranteed under Proposition 13 passed in 1978. What this means is that a $1 tax is imposed for every $100 of assessed value of the property. In addition, under the provisions of Proposition 13, any taxes levied by any governmental agency on top of the 1% must be approved by 66 2/3% of the voters. However, in the case of the school bonds, only 55% majority is required as provided for under Proposition 39. Therefore, any rate you will see in your tax bill added to the 1%, represents a debt or debts approved by the voters.
Can my property taxes change from year to year?
Yes. Proposition 13 allows for an increase of up to 2% of property value each year. (Revenue and Taxation code 51) Also, the tax rate in your area can increase as new bonds are added or decrease as existing bonds are paid off. Special Assessments can also cause an increase or decrease as they are added or deleted.
What is a supplemental tax bill?
State law requires that the Assessor reappraise property value immediately upon a change of ownership or completion of new construction. The Assessor's Office must issue a supplemental assessment that reflects the difference between the new and prior assessed values. The difference in values is multiplied by the rate applicable to the date of the event and then prorated based on the number of months remaining in the fiscal year, ending June 30th. If you purchased the property for less than the amount assessed on the tax roll and the current taxes are paid, you will receive a supplemental tax refund.
Will I get a supplemental tax (bill) every year?
No. It is a one-time adjustment. It only occurs when there is a change of ownership or when a new construction project is completed. In a few instances, destruction of property due to acts of nature could lead to a negative adjustment that may result in a supplemental refund
What are special assessments?
Special assessments are additional charges attached to a tax bill levied by cities, special districts, and other governmental entities. Special assessments are not part of the tax rates. These assessments may include but are not limited to the following: garbage collection, weed abatements, sewer charges, maintenance fees, Mello-Roos, etc. The calculation of these charges is the responsibility of the agency that levies them. These special assessments are individually identified on your tax bill. For questions regarding these special assessments, please call the telephone number of the agency that levied it. The phone number is indicated on your tax bill corresponding to the assessment in question.
What is Mello-Roos?
The Mello-Roos Act of 1982 provides a flexible alternative method for local governments to finance public facilities. This legislation allows cities, counties, and special districts to designate specific areas as “Community Facilities Districts” (CFD) and, with the approval of two-thirds of the qualified voters, allows these districts to issue bonds and collect special taxes to finance such projects. The CFD may finance projects with a specific benefit to the district, such as streets, water, sewer, and drainage facilities, as well as projects of a more general nature, such as parks, schools and libraries.
How long will Mello-Roos fees last?
Generally, the bonds are paid over a period of 10 to 20 years. To get an exact time period for your assessment, you will need to contact the agency shown on your tax bill.
How long does it take to obtain a refund?
The Property Tax Division of the Auditor-Controller's Office (ACO) issues refunds as a result of value corrections, assessment appeals and special assessment reductions. Once these corrections are made to the tax roll, the refund is sent to the Tax Collector’s Office (TC), where a “claim for refund” is prepared and mailed to the taxpayer. When the claim form is returned, the TC will release the refund back to the Auditor-Controller to process a refund warrant. As a matter of policy, the refund warrant is processed within 10 working days.
Contact the Auditor-Controller’s Office:
We are located at:
4080 Lemon St. 11th Floor
Riverside, CA 92501
Telephone: (951) 955-3800
Fax: (951) 955-3802
For the following issues, please contact the agency identified on your tax bill.
- What is the balance of my Mello-Roos?
- Who shall I ask about Mello-Roos? School bond?
- How long do I have to pay my voter approved bond?
- How do I clear or pay my delinquent garbage bill?
- I have a well to supply me with water. Do I still have to pay the
assessment for water on my tax bill?
Saturday, November 21, 2009
Wednesday, November 11, 2009
Monday, November 9, 2009
Home-Buyer Tax Credit
The tax credit has been extended and expanded for 2010! Meaning, it's still a great time to buy! I'm including an article from the Los Angeles Times which outlines in detail the new and improved bill for 2010.
This time, income limits have been raised, so millions more people are eligible. You don't have to be a first-timer either.
Millions of additional people may be able to take advantage of the new and improved first-time home-buyer tax credit now, and it's not just for first-time home buyers anymore. You may qualify.
President Obama signed legislation Friday to extend unemployment benefits to American workers. The law also includes provisions that vastly expand the number of people eligible for home-buyer credits by boosting the income eligibility limits, giving buyers more time, creating a $6,500 credit for longtime homeowners and launching more-accommodating rules for members of the military. Here are the details.
The $8,000 credit
If you were locked out of the first-time home-buyer credit in the past simply because you earned too much, there's good news.
Now you can qualify for the full $8,000 first-time home-buyer credit with a single income of up to $125,000 and married income of up to $225,000. Those who earn more will be phased out.
The credit ends completely once single income exceeds $145,000 and married income exceeds $245,000. Still, that's a big boost from the previous law that shut off the credit for singles earning more than $95,000 and married couples who earned more than $170,000. Other eligibility rules
* You must not have owned another home for at least the previous three years.
* You must buy a home (or have a binding contract to buy) by April 30, 2010. Under the new law, if the sale doesn't close on time, you can still get the credit as long as you've got a binding contract on the ending date, said Jackie Perlman, tax analyst with the Tax Institute at H&R Block in Kansas City.
* You must be older than 18 and not claimed as a dependent by any other taxpayer.
* The property you purchase cannot have been acquired from a relative.
* You must attach a copy of your settlement statement with your tax return to claim the credit.
* Most buyers also must continue to own this new home for at least three years. If they sell in less time, the government will demand that they pay the credit back, said Clint Stretch, director of tax policy with Deloitte Tax.
Special rules for military
The government will not require repayment of the credit if you are a member of the military and had to sell or stop using the home as a residence because of extended duty, however.
In addition, those serving outside of the U.S. during any part of 2009 or early 2010 will get an additional year to claim the credit. In other words, the credit ends for most people on April 30, 2010, but it lasts until April 30, 2011, for active-duty service members working overseas.
The $6,500 credit
The new law carves out an additional credit for current homeowners.
If you have owned and lived in a home for at least five consecutive years of the last eight years, you could qualify for a $6,500 tax credit, if you buy a new home between now and April 30.
The "five-of-eight" requirement means that this credit could accommodate people who lost their homes in the last year or two to foreclosure or even sold a house and didn't immediately replace it, said John. W. Roth, senior tax analyst with CCH Inc., a Riverwoods, Ill., publisher of tax information.Would you have to sell your residence for it to qualify for the $6,500 credit, if you wanted to buy a new one? Not necessarily, Roth said. The home you purchase must become your principal residence, so you would have to move there. But nothing in the law says you cannot keep your existing residence as a second home or rental, he said.
If you do choose to sell your existing residence, you need to pay close attention to how much you earn on that sale, Stretch said. That's because taxable profits from the sale of your residence will be added to your other earnings to determine whether your adjusted gross income exceeds the allowable thresholds.
This credit also phases out for singles earning more than $125,000 and married couples earning more than $225,000.
On the bright side, some profits from the sale of a personal residence don't count. That's because taxpayers are allowed to exclude up to $250,000 per person or $500,000 per couple in profits on the sale of their personal residence from tax, if they lived in that home for two of the last five years, Stretch said. Only profits exceeding those excluded amounts would be included in income, he noted.
Getting muddled? Let's look at an example to clarify.
John and Sue Smith own a home that they bought for $100,000 in 1965. They're now retired and want to scale back, selling that home, which is now worth $750,000, and buying a smaller home with the help of the new $6,500 credit.
Their net profit on this sale would be $650,000, but they can exclude $500,000 of that gain from tax, based on existing law. They will have to add the remaining $150,000 capital gain to their adjusted gross income to determine whether they can qualify for the new credit.
If all of their other income adds up to less than $75,000, they have no worries because the $150,000 and $75,000 add up to $225,000 -- the beginning of the credit's phase-out range for married couples. If they earn more, however, they begin to lose their ability to take the credit.
There are other arcane rules relating to profits earned on the sale of a home, so those with substantial profits may want to consult a tax professional before banking on the credit.
"It's really confusing," Roth allowed. "It's as if they took the old law and threw it in a Mixmaster. Some things still apply; others don't. The time frames are all new. This is going to keep a lot of tax accountants in business for a long time."
By Kathy M. Kristof, LA Times
This time, income limits have been raised, so millions more people are eligible. You don't have to be a first-timer either.
Millions of additional people may be able to take advantage of the new and improved first-time home-buyer tax credit now, and it's not just for first-time home buyers anymore. You may qualify.
President Obama signed legislation Friday to extend unemployment benefits to American workers. The law also includes provisions that vastly expand the number of people eligible for home-buyer credits by boosting the income eligibility limits, giving buyers more time, creating a $6,500 credit for longtime homeowners and launching more-accommodating rules for members of the military. Here are the details.
The $8,000 credit
If you were locked out of the first-time home-buyer credit in the past simply because you earned too much, there's good news.
Now you can qualify for the full $8,000 first-time home-buyer credit with a single income of up to $125,000 and married income of up to $225,000. Those who earn more will be phased out.
The credit ends completely once single income exceeds $145,000 and married income exceeds $245,000. Still, that's a big boost from the previous law that shut off the credit for singles earning more than $95,000 and married couples who earned more than $170,000. Other eligibility rules
* You must not have owned another home for at least the previous three years.
* You must buy a home (or have a binding contract to buy) by April 30, 2010. Under the new law, if the sale doesn't close on time, you can still get the credit as long as you've got a binding contract on the ending date, said Jackie Perlman, tax analyst with the Tax Institute at H&R Block in Kansas City.
* You must be older than 18 and not claimed as a dependent by any other taxpayer.
* The property you purchase cannot have been acquired from a relative.
* You must attach a copy of your settlement statement with your tax return to claim the credit.
* Most buyers also must continue to own this new home for at least three years. If they sell in less time, the government will demand that they pay the credit back, said Clint Stretch, director of tax policy with Deloitte Tax.
Special rules for military
The government will not require repayment of the credit if you are a member of the military and had to sell or stop using the home as a residence because of extended duty, however.
In addition, those serving outside of the U.S. during any part of 2009 or early 2010 will get an additional year to claim the credit. In other words, the credit ends for most people on April 30, 2010, but it lasts until April 30, 2011, for active-duty service members working overseas.
The $6,500 credit
The new law carves out an additional credit for current homeowners.
If you have owned and lived in a home for at least five consecutive years of the last eight years, you could qualify for a $6,500 tax credit, if you buy a new home between now and April 30.
The "five-of-eight" requirement means that this credit could accommodate people who lost their homes in the last year or two to foreclosure or even sold a house and didn't immediately replace it, said John. W. Roth, senior tax analyst with CCH Inc., a Riverwoods, Ill., publisher of tax information.Would you have to sell your residence for it to qualify for the $6,500 credit, if you wanted to buy a new one? Not necessarily, Roth said. The home you purchase must become your principal residence, so you would have to move there. But nothing in the law says you cannot keep your existing residence as a second home or rental, he said.
If you do choose to sell your existing residence, you need to pay close attention to how much you earn on that sale, Stretch said. That's because taxable profits from the sale of your residence will be added to your other earnings to determine whether your adjusted gross income exceeds the allowable thresholds.
This credit also phases out for singles earning more than $125,000 and married couples earning more than $225,000.
On the bright side, some profits from the sale of a personal residence don't count. That's because taxpayers are allowed to exclude up to $250,000 per person or $500,000 per couple in profits on the sale of their personal residence from tax, if they lived in that home for two of the last five years, Stretch said. Only profits exceeding those excluded amounts would be included in income, he noted.
Getting muddled? Let's look at an example to clarify.
John and Sue Smith own a home that they bought for $100,000 in 1965. They're now retired and want to scale back, selling that home, which is now worth $750,000, and buying a smaller home with the help of the new $6,500 credit.
Their net profit on this sale would be $650,000, but they can exclude $500,000 of that gain from tax, based on existing law. They will have to add the remaining $150,000 capital gain to their adjusted gross income to determine whether they can qualify for the new credit.
If all of their other income adds up to less than $75,000, they have no worries because the $150,000 and $75,000 add up to $225,000 -- the beginning of the credit's phase-out range for married couples. If they earn more, however, they begin to lose their ability to take the credit.
There are other arcane rules relating to profits earned on the sale of a home, so those with substantial profits may want to consult a tax professional before banking on the credit.
"It's really confusing," Roth allowed. "It's as if they took the old law and threw it in a Mixmaster. Some things still apply; others don't. The time frames are all new. This is going to keep a lot of tax accountants in business for a long time."
By Kathy M. Kristof, LA Times
Friday, November 6, 2009
Market Update for Inland Empire
The chart shows the average days on the market and pricing information with a monthly overview. Please contact me for further information or details. Thanks!
(951) 505 - 1195
Wednesday, November 4, 2009
Foreclosures
I wanted to post some information on foreclosures because so many people are curious about them but do not have enough information to go off of. So, this article is taken from bankrate.com. If you have any questions outside out this, please let me know! Call anytime (951) 505-1195.
With interest rates at record lows and the stock market looking too perilous for small investors, many people are putting money in an asset they understand -- real estate.
One of the best places to invest is in foreclosures and bargain residential real estate.
The current market conditions make it a perfect time for a small investor to purchase one or more foreclosure properties for their private residence, rental or resale. During economic downturns, more upscale homes go into foreclosure, so the notion that foreclosure homes are only available in crime-ridden areas is inaccurate. Beachfront and homes in affluent areas are part of the mix of foreclosed properties available.
But anyone considering buying a foreclosed home should forget about paying pennies on the dollar.
"You can buy foreclosures for as cheap as 30% or 40% below market, but most foreclosures sell for 5% below market," said John T. Reed, editor of Real Estate Investor's Monthly, a newsletter based in Alamo, Calif.
Yet the savings may be twofold if the property is purchased from the lender who holds the mortgage that's in default. That lender may be willing to waive some closing costs, maybe even offer a break on the interest rate or the down payment.
Investment of time
A novice must learn to navigate the foreclosure process. But Todd Beitler, owner of the Real Estate Library in Boca Raton, Fla., says the time and effort can translate to savings. "If somebody spends 10 hours a week for five weeks to do research, it's worth it."
For most consumers, however, the foreclosure process can prove daunting, Reed says. Good buys are available, but they require research, preparation, patience and persistence.
The foreclosure process starts when a property owner falls behind on mortgage payments. Many owners of homes that go into foreclosure have been struggling financially for almost a year before they give up, which usually means that the house has not received needed repairs or general maintenance for a while.
This may include everything from missing light bulbs to roof leaks. Tree limbs in front yards, broken appliances and windows, and dirty carpets, floors and walls are found in even very-affluent area foreclosures.
This can be a boon -- or boondoggle -- for a buyer. Houses in poor condition might fetch bargain prices, but repairs can boost the cost again. The first rule of real estate, "location, location, location," applies in these situations. If there is trash in every room of the house, but the foreclosure is in a good area with high property resale values, hold your nose, walk through the entire house and consider making a low offer.
Reading assignments
When a lender decides to foreclose on a property, a notice of default or a lis pendens (Latin for "lawsuit pending") is filed, depending on the state. This document is a public record, and for buyers, it's the first step in locating a property in foreclosure. A buyer looking for foreclosures also can buy magazines and newsletters that list properties in default.
Once a home has been located, search public records. Look for liens on the property, since they can drive up the purchase price. Liens typically are placed on a house for unpaid property taxes. Also check assessed values and sale prices of neighboring properties.
Research local state foreclosure laws, since they differ. Some states -- such as Florida, New York, Ohio and Pennsylvania -- require the lender to sue the borrower and get a court order for the sale of the property, a process known as judicial foreclosure. Other states -- including California and Texas -- follow the non-judicial foreclosure process, which doesn't require a lawsuit.
For novice investors, buying from the lender is the safest way to buy. Most foreclosures are taken back by the bank during auction, Beitler says. While well-located homes in good shape generally don't sell for deep discounts, rundown properties can be sold more cheaply.
Often, the banks hire a real estate agent and sell foreclosed homes in the traditional manner, Reed says. But sometimes buyers can succeed by pestering bank loan officers with low offers.
Buyers might try low-balling the lender's REO (for "real estate owned") officer shortly before the nonperforming assets have to be reported to supervisors, Beitler says.
The safest deals
Bank-owned properties offer the safest deal for inexperienced foreclosure buyers, Beitler says: "There's no risk. There are no taxes, no liens, no tenants to evict."
A lender that's eager to sell might be willing to offer attractive terms, says George Tribble, broker of record at Jetstream Mortgage in Oakland, Calif., and past president of the California Association of Mortgage Brokers.
The lender might offer to finance the property at a below-market rate or with a lower-than-usual down payment. Because the bank already has done an appraisal, the buyer might not have to pay an appraisal fee, Tribble says. And lender deals typically include title insurance, which removes much of the risk that accompanies buying homes earlier in the foreclosure process.
Hidden foreclosures
Not all foreclosures are previously owned homes. Some foreclosed homes are new. These homes are not as easy to identify and rarely appear on national lists. In some areas, the slow economy has left many builders of new midscale and upscale homes at the end of their construction-loan periods without finding buyers for their homes.
In these cases, the banks that issued the construction loans take possession of the homes and attempt to sell them, using real-estate agents to handle the deals.
These, too, are foreclosures. They are "hidden" foreclosures because no one associated with the sale of these properties will refer to them as foreclosed homes.
More daring investors can find other points in the process to buy homes, like just before foreclosure. The buyer finds a homeowner about to go into default. The homeowner doesn't want to lose all of the equity in the property, so accepts a portion of the difference between the equity and the home's market value.
Pre-foreclosure buys offer bargains but demand persistence. That's because creditors are often hounding owners at this stage. "Trying to get through to the homeowner is virtually impossible," Beitler says.
If the homeowner is contacted, the buyer could be in for a surprise, Reed adds. Homeowners in default might not have phones or electricity, and they might have a variety of personal and legal problems. What's more, they probably need somewhere to live before they can move out of the property the buyer wants.
This is a high-risk, high-reward proposition, and it's not for first-time foreclosure buyers, Beitler says.
The auctioneer
Most auctions take place at the county courthouse steps, and they pose disadvantages: Buyers might not be able to inspect the property, and they'll have to put up the entire purchase price the same day.
The U.S. Department of Housing and Urban Development also runs auctions to unload homes it has acquired through defaults on federally backed mortgages. There aren't a lot of steals in this process, according to a study by Tim Allen, a real estate professor at Florida Atlantic University.
Allen tracked sales at a HUD auction in Florida in 1998; he found that buyers paid prices very close to assessed value. Beitler agrees that there's a "frenzy" at HUD auctions that can push prices to unreasonable levels.
The cost of getting started
With good credit, many banks will loan the full price of the foreclosure or more. If the home is to be used as a rental, many banks will require only a 10% down payment.
Individuals with a large amount of equity in another home may get a line of credit from their bank to purchase a foreclosure. When they convert the line of credit to a mortgage, no down payment may be required.
Foreclosure homes bought in good areas at below market values that appreciate annually can be a sound investment strategy for many investors. The appreciation of the homes is tax-exempt until the home is sold. If the home is a primary residence, the appreciation may be tax-free.
Homes used as rental properties give most investors valuable tax deductions while the house increases in value and builds equity. With many stock portfolios down, foreclosure real estate investing may be the alternative many people are seeking.
With interest rates at record lows and the stock market looking too perilous for small investors, many people are putting money in an asset they understand -- real estate.
One of the best places to invest is in foreclosures and bargain residential real estate.
The current market conditions make it a perfect time for a small investor to purchase one or more foreclosure properties for their private residence, rental or resale. During economic downturns, more upscale homes go into foreclosure, so the notion that foreclosure homes are only available in crime-ridden areas is inaccurate. Beachfront and homes in affluent areas are part of the mix of foreclosed properties available.
But anyone considering buying a foreclosed home should forget about paying pennies on the dollar.
"You can buy foreclosures for as cheap as 30% or 40% below market, but most foreclosures sell for 5% below market," said John T. Reed, editor of Real Estate Investor's Monthly, a newsletter based in Alamo, Calif.
Yet the savings may be twofold if the property is purchased from the lender who holds the mortgage that's in default. That lender may be willing to waive some closing costs, maybe even offer a break on the interest rate or the down payment.
Investment of time
A novice must learn to navigate the foreclosure process. But Todd Beitler, owner of the Real Estate Library in Boca Raton, Fla., says the time and effort can translate to savings. "If somebody spends 10 hours a week for five weeks to do research, it's worth it."
For most consumers, however, the foreclosure process can prove daunting, Reed says. Good buys are available, but they require research, preparation, patience and persistence.
The foreclosure process starts when a property owner falls behind on mortgage payments. Many owners of homes that go into foreclosure have been struggling financially for almost a year before they give up, which usually means that the house has not received needed repairs or general maintenance for a while.
This may include everything from missing light bulbs to roof leaks. Tree limbs in front yards, broken appliances and windows, and dirty carpets, floors and walls are found in even very-affluent area foreclosures.
This can be a boon -- or boondoggle -- for a buyer. Houses in poor condition might fetch bargain prices, but repairs can boost the cost again. The first rule of real estate, "location, location, location," applies in these situations. If there is trash in every room of the house, but the foreclosure is in a good area with high property resale values, hold your nose, walk through the entire house and consider making a low offer.
Reading assignments
When a lender decides to foreclose on a property, a notice of default or a lis pendens (Latin for "lawsuit pending") is filed, depending on the state. This document is a public record, and for buyers, it's the first step in locating a property in foreclosure. A buyer looking for foreclosures also can buy magazines and newsletters that list properties in default.
Once a home has been located, search public records. Look for liens on the property, since they can drive up the purchase price. Liens typically are placed on a house for unpaid property taxes. Also check assessed values and sale prices of neighboring properties.
Research local state foreclosure laws, since they differ. Some states -- such as Florida, New York, Ohio and Pennsylvania -- require the lender to sue the borrower and get a court order for the sale of the property, a process known as judicial foreclosure. Other states -- including California and Texas -- follow the non-judicial foreclosure process, which doesn't require a lawsuit.
For novice investors, buying from the lender is the safest way to buy. Most foreclosures are taken back by the bank during auction, Beitler says. While well-located homes in good shape generally don't sell for deep discounts, rundown properties can be sold more cheaply.
Often, the banks hire a real estate agent and sell foreclosed homes in the traditional manner, Reed says. But sometimes buyers can succeed by pestering bank loan officers with low offers.
Buyers might try low-balling the lender's REO (for "real estate owned") officer shortly before the nonperforming assets have to be reported to supervisors, Beitler says.
The safest deals
Bank-owned properties offer the safest deal for inexperienced foreclosure buyers, Beitler says: "There's no risk. There are no taxes, no liens, no tenants to evict."
A lender that's eager to sell might be willing to offer attractive terms, says George Tribble, broker of record at Jetstream Mortgage in Oakland, Calif., and past president of the California Association of Mortgage Brokers.
The lender might offer to finance the property at a below-market rate or with a lower-than-usual down payment. Because the bank already has done an appraisal, the buyer might not have to pay an appraisal fee, Tribble says. And lender deals typically include title insurance, which removes much of the risk that accompanies buying homes earlier in the foreclosure process.
Hidden foreclosures
Not all foreclosures are previously owned homes. Some foreclosed homes are new. These homes are not as easy to identify and rarely appear on national lists. In some areas, the slow economy has left many builders of new midscale and upscale homes at the end of their construction-loan periods without finding buyers for their homes.
In these cases, the banks that issued the construction loans take possession of the homes and attempt to sell them, using real-estate agents to handle the deals.
These, too, are foreclosures. They are "hidden" foreclosures because no one associated with the sale of these properties will refer to them as foreclosed homes.
More daring investors can find other points in the process to buy homes, like just before foreclosure. The buyer finds a homeowner about to go into default. The homeowner doesn't want to lose all of the equity in the property, so accepts a portion of the difference between the equity and the home's market value.
Pre-foreclosure buys offer bargains but demand persistence. That's because creditors are often hounding owners at this stage. "Trying to get through to the homeowner is virtually impossible," Beitler says.
If the homeowner is contacted, the buyer could be in for a surprise, Reed adds. Homeowners in default might not have phones or electricity, and they might have a variety of personal and legal problems. What's more, they probably need somewhere to live before they can move out of the property the buyer wants.
This is a high-risk, high-reward proposition, and it's not for first-time foreclosure buyers, Beitler says.
The auctioneer
Most auctions take place at the county courthouse steps, and they pose disadvantages: Buyers might not be able to inspect the property, and they'll have to put up the entire purchase price the same day.
The U.S. Department of Housing and Urban Development also runs auctions to unload homes it has acquired through defaults on federally backed mortgages. There aren't a lot of steals in this process, according to a study by Tim Allen, a real estate professor at Florida Atlantic University.
Allen tracked sales at a HUD auction in Florida in 1998; he found that buyers paid prices very close to assessed value. Beitler agrees that there's a "frenzy" at HUD auctions that can push prices to unreasonable levels.
The cost of getting started
With good credit, many banks will loan the full price of the foreclosure or more. If the home is to be used as a rental, many banks will require only a 10% down payment.
Individuals with a large amount of equity in another home may get a line of credit from their bank to purchase a foreclosure. When they convert the line of credit to a mortgage, no down payment may be required.
Foreclosure homes bought in good areas at below market values that appreciate annually can be a sound investment strategy for many investors. The appreciation of the homes is tax-exempt until the home is sold. If the home is a primary residence, the appreciation may be tax-free.
Homes used as rental properties give most investors valuable tax deductions while the house increases in value and builds equity. With many stock portfolios down, foreclosure real estate investing may be the alternative many people are seeking.
Monday, November 2, 2009
Introduction:
Hello!! Thanks for checking out my blog!
I thought I should introduce myself and my experience in my first blog entry. I have been involved in the real estate industry for as long as I can remember. My father was a real estate investor, so I was constantly hearing about what he was doing in the market growing up. In high school, I began working as an assistant to some of the leading ladies in the real estate industry, where I learned more specifically the details of each transaction. I helped prepare newsletters and home fliers, coordinated and ordered inspections, organized files, prepared and hosted open houses, did door-to-door canvasing and assisted in the preparation of listing presentations and buyer consultations. I worked as an assistant to these motivated and successful agents for five years, which ultimately encouraged me to pursue my own real estate career. I became a licensed salesperson in October 2004 and have worked in real estate fields ever since.
I became involved with the team at Prudential California Realty in January 2005, which is where I continue to keep my license and work full-time in real estate sales. My passion is helping people find a home to purchase or to help prepare a home for sale, so I put my full effort into each transaction I take part in. The biggest compliment I can receive is the referral of a friend or family member to use my real estate service.
Besides residential sales, I have studied and worked in various related fields including Property Management (2006) as a leasing consultant, and real estate sales and data research for Hanley Wood Market Intelligence (January 2007 - present). My work with Hanley Wood only compliments my work in sales, as I am able to keep up-to-date with market trends and conditions as well as have an in-depth comprehension of pricing, community information, and what's to come in real estate development.
Furthermore, I obtained my Bachelor's degree in Communications from California State University of San Bernardino in 2006, where I also studied journalism and real estate.
I am here to answer questions and assist you with any real estate needs. Please email me at Amber4RealEstate@gmail.com or call me directly at
(951) 505-1195.
On this blog I will be posting videos and blog entries to answer some FAQ's in hopes of clarifying some general information on the current market, etc. Again, thanks for checking out my blog and come back frequently for updates!
(951) 505-1195.
Subscribe to:
Posts (Atom)
