State of the Market – January 2016

I recently had a friend, from when I was much younger, reach out and ask me:

I see unemployment is down but the numbers don’t reflect how many are not actively pursuing jobs. Gas prices are down and the stock market is correcting. From a real estate stand point is the economy holding or beginning to go down. I understand these things go in cycles.

Great question… let me try and tackle it.

First and foremost, Real Estate is a local thing.  When you hear “major players” like Barbar Corcoran talking on the Today Show, you’re getting a 10,000 foot view of the market – or more!  The fact is, you live on the ground.  So, while it may be valuable information for those looking to invest in real estate, it’s not all that informative for those of us looking for a place to lay our heads at night.

Now, the market has come a long way… a LOOOOONNNG way from the doldrums of 2009-10.  Houses actually sell right now, and values are, at very least, steady – if not climbing ever so slightly.  The variable in the market from 2009-10 is the same one we deal with today – Inventory.  Real Estate is a great lesson in supply v. demand.  Back in 09-10, we had too much inventory, all over the board.  We had McMansions that were 1-2 years old, we had brand new construction that was build on speculation, and we had older homes that people paid inflated prices for during the boom.  The new construction was in pristine condition; however, it was priced at a premium that the market could no longer support.  Inflated land purchases from a few years earlier drove the hard costs up.  So, builders were losing their shirts.  The McMansions were underwater, and the owners – many who went “stated income” and didn’t make the income they stated – could no longer keep up with general maintenance.  Similarly, the older homes were under water and couldn’t be kept up.  So, while inventory is measured in months, typically, in 09-10 it was measured in years.

A six-month supply of inventory is considered a balanced market.  When it goes longer, leverage shifts to the buyer.  When it dips under six months, it’s a seller’s market.  We were in a buyer’s market with all kinds of inventory.

Today, we still have an inventory problem.  We’ve metabolized the short sales and foreclosures.  They’re no longer the driving force in the inventory we have.  In fact, the issue now is that we don’t have enough inventory.  That is a huge problem.

Why do we have an inventory problem?

Now, this is clearly all opinion; however, it’s also what I see on a daily basis at listing appointments and through discussions with clients.  The issue seems to be that all of the homeowners that have weathered the storm of the bubble bursting – those that had to beg, borrow and (possibly) steal to keep their homes – have no equity.  They’ve worked hard to keep up with the commitment they made.  They’ve lived paycheck-to-paycheck, sometimes bridging the gap with credit cards, loans, whatever it may be.  Now, the noose of debt has loosened it’s choke-hold and they’re more comfortable, but with no equity.  In short, they cannot afford to move.  Who wants to write a $20k check at closing - when they’re selling their property!  Most of these homeowners are “housepoor” and can’t move because their home is worth – at best – what they owe on it.

Feeding this problem is the lack of credit.  Now, I am not saying the banks aren’t lending – they are; however, the homeowner that has done everything they could do to live up to their commitments through a job loss/change, divorce, etc over the past 7 years has been rewarded with unlendable credit scores.  That will eventually fix itself – mark my words, Subprime lending will be back (in some cases, it already is).

Why is the lack of inventory a problem?

The market is driven by one thing – sales.  Real Estate settlements are the fuel for the market.  No fuel, you don’t go anywhere.  As my college wrestling coach would tell us, “whether you’re a Ferrari or a Jalopy, when you’re out of gas, you’re out of gas.”  Right now, our market is out of gas.  Without sales – especially at the higher end – the values don’t increase.  Without the values increasing, homeowner’s don’t have equity.  It’s a round-robin.  Slow sales = slow value increase = low inventory = slow sales… and so on, and so on, and so on.

OK, so what’s ahead?

As my friend mentioned in his question, unemployment is down, and gas prices are down.  If there’s a hope in the market, it could very well be those two factors.  Unemployment being down means that incomes are on the rise.  More people are working – despite those that left the market (let’s be honest, wouldn’t we all leave the market if we could? But, we can’t.).  Gas prices being down will lower total cost of living.  Remember in 2008 when gas was approaching $5 per gallon (if you drive something that requires 91 octane or above, you eclipsed $5 per gallon).  Today, the average gas price has dropped below $2 per gallon.  This means more “expendable income.”  Now, this income can go a couple of ways.  For many, it will be a flat screen TV and new whip.  For others, it will go to paying down debt and adding to savings – these are your future sellers (and buyers).

How long?

Ha… your guess is as good as mine.  If I had a crystal ball, I wouldn’t be selling real estate, I would just play Powerball.

 

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Back To School

It’s back to school for most of our area…  what does  that mean in Real Estate?  Well, for much of the Berks County and surrounding market areas, it means buyers are once again becoming focused on their search.

Let’s face it.  Selling a house in the summer can sometimes feel like selling bathing suits in February.  Sure, there are those that have a trip planned, but for most of us, we’re just burying our heads, waiting for the first sign of life.

Over the past two years, the market has behaved somewhat differently than it has in the past.  Typically, you have your “Spring Market.”  This kicks off after the Super Bowl.  Many of you may have heard me joke that it is basically when men will go back out looking at houses on a Sunday.  Probably more truth to that than anyone would like to admit!  The Spring Market traditionally ran through June… sputtering to a halt by the Fourth of July.  Next up, the fall market (NOW)… this runs from back-to-school through mid-November.  Recently, the July/August slow down has been minimal.  I attribute this to the harsh winters we’ve had lately.  How many of you were thinking home buying during the many polar vortexes?

So, what we have now is a market that has maintained some momentum through the summer, and will continue to perform until Halloween – or shortly thereafter.  As a buyer, that means that the market could be competitive.  Let’s stop low-balling every seller and actually try to close on something… 2010 is long gone, you missed that opportunity.  For Seller’s, this means we’re back into a neutral market.  Neither buyer nor seller have an inordinate amount of leverage in these negotiations.

Back with a healthiER market (not yet full-blown healthy) is the more widely accepted Home Sale Contingency… properties are moving once again.

In short, we’re back to school – and you should be back to house-hunting if you’re looking to make a move.  Rates are still hovering at a low point (about 4%) and property values are increasing.  Sales are at the highest levels we’ve seen since the bubble burst 8 years ago.

Strike while the iron’s hot!

 

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Government Shutdown… What will this mean to the mortgage industry?

With the possibility of a government shutdown looming in the hours ahead of us… what can one expect?

Here is a statement released from the Mortgage Bankers Association that can answer some of the questions you might have.

Click Here to see the article: Shutdown

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Buyer – and Seller – BeAware!

Well, I knew this time would come.  The DOW Jones is at an all-time high, and homebuilder stocks are on the rise.  There has been talk for some time about a “Housing Recovery.”  Well, it is here.

I have been an optimist about the resolve of our people, and always held the confidence that things were not always improving – but they weren’t as bad as the national media had hyped them to be.  Therefore, this post is somewhat out of character for me.  I don’t typically post anything “negative,” but, this morning I got a disturbing text:

Back in the mortgage business.  I am with a credit union.  0 points lowest rates.  You know anyone send them my way pls.  [Name withheld].  [Phone withheld] Plus I pay you referral bonus each person that need my help $200.

First of all, the most disturbing part of this isn’t even the fact that offering a referral is illegal.  It’s the fact that my reply was, “Who is this?”  Once the person identified herself, it got more concerning… SHE DIDN’T KNOW WHO I WAS!  I was “in [her] rolodex, did we do business before?”

Here it is folks.  After years of mortgage, and real estate professionals alike, jumping ship to the “safe” job with a steady paycheck, they’re being lured back to the business with the idea of easy money – your money.  The real estate profession has battled for years to overcome the stereotype of sleazy, cheap suit wearing slugs that looked at the buyer/seller as nothing more than a dollar sign.  It’s disgusting to see some of these folks thinking they’re going to jump right back in and pick up where they left off in 2008.

I have paid my dues – along with every other agent that has fought hard for every morsel of business in this market.  I still remember my wife thinking I was crazy for leaving a salaried real estate position with a large builder to venture into the unknown… in 2010!  Who was getting into residential resales in 2010?  Not many.  I was.

I built my business by providing exemplary service for clients – buyers and sellers.  Clients that I now consider friends.  I don’t spend much on advertising, you won’t see me in the papers.  I spend time on building relationships, sharpening the saw – as Stephen Covey calls it, the 7th Habit of Highly Effective People.  I spent hours (over 240 in fact) in a classroom to acquire my brokers license.  I spent more time to receive designations, such as Certified Residential Specialist (CRS), Graduate, Realtor Institute (GRI), Short Sale & Foreclosure Resource (SFR).

Now, I have to fight for business on a different front.  I may not be competing for mortgages – as this text I received was – but, I am all but certain that if this is starting in the lending arena, it’s already started on the purchase and sales sides.

I have a lender that I’ve dealt with for the better part of 3 years now.  I deal with her for one reason – SHE DOES IT RIGHT.  Would you like a reference?  I could provide you with pages of references on her ability, knowledge, communication skills, patience, and (most importantly) integrity.

I have two home inspection companies I work with – for the same reason as the lender I chose.  They’re professionals performing at the highest levels in their fields.

Birds of a feather flock together.

Think about who you’re working with – are they willing to sell you to a bum lender for a $200 referral fee?  Are they willing to compromise your security in a transaction?  What else are they doing that’s not on the “up and up”?

Ask your agent – who they deal with… why they deal with that person… do they have experience with that person… know what’s going on – it’s YOUR MONEY!

I recently had a client looking for unique financing due to the property they were looking to purchase.  It consisted of a lot of farm land, so the financing changes slightly.  I reached out to the people I know and asked them who’d they recommend.  I then contacted the VP of lending at that bank and asked to be set up with someone on their team that could deliver. That’s how you find a lender – when you need something different.  That’s professional courtesy to your client.

I was burned in my first re-sale transaction by a lender.  She couldn’t get the deal closed in 45 days in 2010.  That was insane.  It took nearly 2 1/2 months.  I was embarrassed and learned an important lesson – surround yourself with the best.

If you know me, you know I am competitive.  I look at those I associate myself with as a “team.”  That includes my clients.  I have a lender, home inspectors, lawyers, title clerks, and insurance agents that are the best in their business.  I expect that of myself – I expect that of them.  Nobody is winning any Superbowls with average players.

Hard work beats talent when talent doesn’t work hard.

I guess, at the end of the day, I do get a “referral fee” from my associates.  I get the peace of mind that my clients are taken care of – and my deals close.   Maybe that’s just not enough for others.

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Is housing still dangling off the Fiscal Cliff?

The recent bill passed to avoid the financial crisis we now identify as “The Fiscal Cliff” has some items in it that will impact housing for the short term.  However, some items are yet to be addressed, and they could still have a much bigger impact on the future of the housing market on a national scale.

First, let’s look at what the bill renewed:

# 1 – Mortgage Debt Relief Forgiveness Act – Extended through 2013

The Mortgage Debt Relief Forgiveness Act is a huge issue for housing, but an issue that we can all hope will be in our rear view mirror come the end of 2013.  The issue is important due to the continued presence of Short Sales and Foreclosures.  The Mortgage Debt Relief Forgiveness Act “forgives” the money the bank loses.  Basically, if someone owes $250k on a home they bought in 2006, and it’s now worth $200k, the bank is going to lose that $50k when the home is sold and the mortgage is “satisfied.”  What happens to that $50k – well, the bank takes it as a loss… which means someone must take it as a “gain” or income.  The act forgives the $50k in “income” so it is not taxable.  Come 2014, the seller could receive a tax bill in for the $50k in income.  At a 20% tax rate – that’s $10k!  Pretty significant.  The act only applies to Primary Residences (the home you live in at least 6 months per year) and the maximum amount forgiven is $2 million.

# 2 – Tax Credits for Energy Efficient Improvements

This measure provides minimal credits ($200 – $500) for energy efficient improvements – such as windows, insulation, etc.  It applies to improvements done in 2012 or 2013.

# 3 – Tax Credits for Energy Efficient New Homes – Continued through 2013

This credit ($2000) is for homes that meet the federal guidelines of an energy efficient home.  In my experience…. good luck getting the necessary documentation from your builder.  It also applies to the use of domestic appliances that are energy efficient.

# 4 – Mortgage Insurance Deduction – through 2013

This isn’t a biggie…. first of all, income threshold is $110,000 – so, if you’re making that, it doesn’t apply.  Secondly, you’re looking at a total deduction of about $2500 per year – on the upper end.  It will save you $400 or so in taxes, so that’s real money.  It all spends!

The bigger news is what wasn’t in the bill…. The Mortgage Interest Deduction (MID).  This is a big deal – for everyone that owns a home, or at least the majority.  I would estimate that on recently purchases/refinanced homes, 85% of your payment is interest.  So, if your Principal and Interest payment is $1000 (not including your Taxes and Insurance if you escrow those items), you’re paying $850 per month in INTEREST.  That is over $10,000 per year.  Using the lower tax bracket of 15% – that’s still $1500 per year (over $100 per month) that your losing…. think about that… it’s like doubling your cable or phone bill.

The MID is not dead.  When they reconvene in the spring and start digging into tax reform, it will be on the table… or the chopping block.  This may be the item that has the single biggest impact on housing, and if removed, it could seriously impact the housing recovery.  For years, people have weighed renting versus owning and the differentiating factor was often times the tax benefit.  Sure, you’re going to have an “asset” in 30-years worth something (assuming you don’t treat it like an ATM).  However, not too many of us can look past next year, let alone 29 more!

 

Posted in Assessment, Berks County, Boyertown, Chester County, Daniel Boone, Distressed Property, Exeter Township, Foreclosure, Governor Mifflin, Home Staging, Montgomery County, New Construction, Oley Valley, Pennsylvania, Property Taxes, Real Estate, Short Sale, Tax Appeal, Twin Valley, Uncategorized, Wyomissing | Leave a comment

Just Dropped In (to see what condition my condition is in)….

This post is motivated by the current market, and furthered by my love for the movie “The Big Lebowski.”  The title of the post is one of my favorite songs from the movie, and it’s a good spark to my day, to get me to write a long overdue post.

Many people I talk to are surprised when I tell them that the market has picked up steam – locally.  They have a neighbors house that has been on the market for the better part of a year, due to a divorce, and the home is vacant and going through short sale…  Well, I have to tell you, that’s not totally indicative of the market.  Sure there are short sales, foreclosures, REO’s, etc.  However, there are also homes that are in good shape, and priced right.  Basically, if you take the 10,000 foot view of the real estate market – locally here in Southeast PA – you will see what I believe the 4 factors are that impact the Supply vs Demand relationship.

First off is expectations – let’s be clear BUYER EXPECTATIONS.  Unfortunately, seller expectations stopped being realistic in 2008, maybe even the end of 2007.  Buyers are driving the market – they are the market.  Perception is reality – and when what they expect isn’t what they perceive, it’s onto the next property.  Buyers are expecting LOWER PRICES.  Now, keeping everything consistent, lower prices means just that – a lower price for the lovely home you and your family have kept up with over the past years.  That is something we’ve likely all felt, declines in our home values.

The relationship gets tricky next… the second factor is the buyer also expects the home to be in GOOD CONDITION.  In the MLS, they list this as “Average+.”  However, “average+” is about as overused as a term can be.  What is average?  Well, based on the average inventory on the market today, we all likely live in above average homes… heck, most people are probably renting above average apartments!  Somewhere along the line, the seller’s felt that since they’re taking a lower price, the buyer can just deal with the issues.  Unfortunately, the seller is finding out all to often that the buyer isn’t going to deal with the issues.

The other two factors are the reality.  The homes prices are lower (relatively) but the condition is poorer (dramatically).

So, basically what the buyer is expecting is lower prices with unchanged condition from before.  What the seller is expecting is to dump their…. um, dump, for a lower price.  And, here we have the disconnect.  Honestly, it’s mostly the banks with this mindset – and it won’t be until they come down much further that the inventory issue will begin to go away.  Right now, cash is king – and if you’re lucky enough to have a down payment, and most of your closing costs covered (the banks typically will only allow 3% in comparison to a “full assist” of 6%), you’re unlikely to have the money to dump into the home to bring it back to it’s livable state.

I preach to my seller’s something I learned from Pat Scargle – one time chef at Canal Street Pub and Restaurant – one of the most valuable lessons one can learn – in the restaurant biz, or any other.

The eyes eat before the stomach.

How profound…. ingenious… remarkable.  Think about that.  How simple is it, and most people just don’t get it.  You wouldn’t bite into a greasy burger with the bun sliding off of it, burnt cheese, and wilted browning lettuce, would you?  So what makes a seller think that a vacant home, smelling of moth balls and pets, with unkempt landscaping, dirty traffic-stained carpets, outdated hardwood, and foul bathrooms would sell?  I mean, I will buy the burger – but, not likely I am going to eat it (I say likely because I did wrestle for many years, and know what hunger can do).  The burger sets me back a buck or two.  The house, well, that’s on a larger scale… so, you’d think the principal is even more important… clearly some don’t.

My niece is out looking for her first home – I asked her the question:

Are you looking for a fixer-upper, or, a home you can fix up?

These are two different properties, in two different price ranges.  It’s that simple.

The reality of today’s market is that inventory (homes) is in poor condition.  This would call for a reduction in price in any market.  However, the price is down – comparable with the rest of the homes in good condition.

The media can help us all out – do us all a huge favor.  Take the “distressed properties” (REO/Short Sale/Foreclosure) out of the “inventory.”  They’re not the same.  If cereal prices were down, and I went to Giant to pick up a box… I wouldn’t expect to pay the same for the smashed box that had been run over by a cart, and possibly opened, as I would for the new box with the crisp corners and unscathed surfaces…

To complicate matters, there is also the issue of lending.  Banks won’t lend against many of these properties due to their condition.  Some are half-flipped rehab projects that got as far as spending money…. demolition isn’t an expensive art… but, other goods cost serious money.  So, the properties owned by banks, banks won’t lend money for…. go figure that one out.  Another one of my pet peeves with the market – banks just don’t think logically.  After all, the guy (or girl) at the desk has no vested interest.  Zig Ziglar will tell you “Once it becomes personal, it becomes important.”

So, if you have a nice home that you take good care of, and you’d like to move… it can happen, and relatively easily.  If you have a dump, get comfortable.

But, seriously, if you’re considering a move now – or in the near future… time to drop in and see what condition your condition is in…

 

Posted in Assessment, Berks County, Boyertown, Chester County, Daniel Boone, Distressed Property, Exeter Township, Foreclosure, Governor Mifflin, Home Staging, Montgomery County, New Construction, Oley Valley, Pennsylvania, Property Taxes, Real Estate, Short Sale, Tax Appeal, Twin Valley, Uncategorized, Wyomissing | Leave a comment

Strategy – Short Sale, now or never?

We, as a country, have gotten better over the past few years at getting back to treating our personal finances like a business. We’ve made decisions for the betterment of our family based on needs, not wants, and we have strategically maneuvered ourselves through the most difficult financial crisis since the Great Depression of the 1930′s.

When you look at how businesses operate, you often wonder how (and why) they declare bankruptcy with such ease. It seems like a nonchalant statement on CNBC to hear of a company filing for bankruptcy protection. Many people, however, don’t have the cut throat business mindset in their personal life to file without the guilt of not fulfilling obligations they agreed to. Those that know me well know that I am one that believes in accountability, and never giving up – as a wrestling coach, it’s pretty much the only way I know. As a real estate broker, I see short sales as a necessity at times, in order for the mere survival of a family. This year, the decision to proceed with a short sale on your home should be in the forefront of your financial discussions, as waiting may bury your further, financially and emotionally.

The issue that’s presented before the American public today is that of the expiration of the Mortgage Forgiveness Debt Relief Act of 2007. What is the act all about? Basically, in many (most) situations, it will allow you to sell your home (with the bank’s approval) for less than you owe on it, and not be penalized by the IRS. This act is scheduled to expire at the end of 2012. What does this mean for those of you treading water financially? It means that should you proceed with a short sale on your home after this year (settlement occurring in 2013), the Internal Revenue Service can tax you on the amount of the loan you come up short!

New construction in Morgantown, PA is the epitome of the “Real Estate Bubble” that burst in 2008. I worked for a builder that had a stronghold on this area, and we built upwards of 200 homes in the Morgantown, PA area. One community alone currently has nearly 10% of the homes in the development actively pursuing a short sale. We are not talk $10,000 dollars (which I think we’d all agree is a significant sum in itself). I currently have a listing that is nearly $150,000 short. The expiration of this act, to put it simply, could require the sellers of the property to pay income tax on $150,000! Put that into perspective with the fact that less than 1% of all Americans gross six figures in income annually.

Now, how do you know if you qualify for a short sale? No one can really tell you for sure that you can sell your home for less than it’s worth; however, there are several factors that come into play. First and foremost, you have to demonstrate that you cannot make the sale whole. In other words, based on the example above, you can’t pursue a short sale with $150,000 sitting in your savings account. The bank will want that money. Secondly, you must demonstrate a hardship that is ongoing, seemingly never-ending. Examples of approved hardships are:

  • Bankruptcy
  • Illness
  • Loss of Job
  • Reduced Income
  • Failed Business
  • Job Relocation
  • Death of Spouse or Co-Borrower
  • Death
  • Incareceration
  • Divorce
  • Marital Separation
  • Military Duty
  • Medical Bills
  • Damage to Property

In a short sale, it is also important to note that the seller is not permitted to walk with any proceeds from the sale – therefore, do not include items in the sale that aren’t necessary.  Sell them on Craigslist, eBay, or in a yard sale.

Short Sales are a viable alternative to foreclosure.  In the eyes of creditors, they acknowledge that you’ve done your best to meet your commitments, and you’re trying to work in their better (hard to say “best”) interest.  In most cases, you’ll be able to purchase a home, with substantial down payment (20%), within 2 years of a short sale.  With a foreclosure, you’ll be waiting a minimum of 3 years, and in most situations 7 years.

As a broker holding the SFR (Short Sale, Foreclosure Resource) designation from the National Association of Realtors, I am experienced in discussing and advising sellers on their options.

Please, contact me if you think you could be in this position.

Posted in Assessment, Berks County, Boyertown, Chester County, Daniel Boone, Distressed Property, Exeter Township, Foreclosure, Governor Mifflin, Home Staging, Montgomery County, New Construction, Oley Valley, Pennsylvania, Property Taxes, Real Estate, Short Sale, Tax Appeal, Twin Valley, Uncategorized, Wyomissing | Leave a comment

Gentleman…. (and ladies)…. Start your Grills!!!

Visit houselogic.com for more articles like this.

Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

Posted in Berks County, Boyertown, Chester County, Daniel Boone, Distressed Property, Exeter Township, Foreclosure, Governor Mifflin, Home Staging, New Construction, Oley Valley, Pennsylvania, Property Taxes, Real Estate, Short Sale, Tax Appeal, Twin Valley, Uncategorized, Wyomissing | Leave a comment

Property Tax Assessment Appeal Procedures

As of right now, I’ve completed over 2,000 property tax appeals for 2011.  It’s a good chance that if you live in a neighborhood in Berks County, PA or Chester County, PA, I can easily do yours – if I haven’t already.

Most people are simply intimidated by the tax appeal process – so I thought I would explain the procedure, and hopefully relieve any reluctance you would have to appeal your tax.

The most important thing to note is that your intention to appeal must be received by August 15th (Berks) or August 1st (Chester).  If you miss this opportunity, you’ll have to wait until next year.  Chester opens their appeal process on May 1, while Berks requires you to submit after July 1.  The forms must be originals – and cannot be faxed or emailed.

Next, the “burden of proof” to establish your current market value is your responsibility.  This is where I help.  I provide you with the comparable sales data, your proposed market value, and your proposed assessment.  I do this through simple mathematics, to level the ground throughout individual communities and neighborhoods.  I provide you with all of the information you need on a cover letter to submit with your appeal.  You need only to complete the county assessment office’s appeal form, and submit that with the information I provide to you via email.

You will be notified of your hearing date via mail.  Please note that when you fill out the county form – it will ask you about days that you will be out of town, unable to attend a hearing.  Please pay attention to this, as these hearings cannot be rescheduled.

Lastly, it’s the “Hearing.”  Everyone gets pretty intimidated by the word “hearing” and thinks they’re going to be cross-examined under a hot, bright light like something out of Law & Order.  This is not the case.  I haven’t personally been into the Chester County hearing; however, I’ve heard it’s much the same as Berks.  In Berks, you meet with 3 members of the appeal board.  Often, people will ask me what they need to bring.  I typically go in with my own copies of the information I’ve already provided – and always walk out with it.  So, nothing is technically needed – but it’s always good to have your own information going in.  The hearing is simply an opportunity to ask questions of the board.  In total, this takes less than 15 minutes.  In fact, my first appeal went as follows:

Assessment Board: “It seems that we have all of the information we need.  Do you have any questions for us?”

Me: “No.”

Assessment Board: “OK, then we’ll take a look at this, and you’ll be notified by mail by the end of October.”

Me: “Thank you.”

That was it – all done.  Now, my experience is that they don’t necessarily go as low as I propose; however, in some instances, they’ve gone beyond what I’ve proposed.  Overall, I’ve never had an appeal declined.

If you’d like to learn more – or request a tax appeal – visit our website at www.BerksListings.com.

Posted in Assessment, Berks County, Chester County, Property Taxes, Tax Appeal | Leave a comment

2010 Common Level Ratio Numbers

I just spoke to the State Tax Equalization Board, and I was given “tentative” numbers for Berks and Chester Counties for the upcoming year.  This is the single most important number when considering a Property Tax Appeal.

Berks County’s number is slated to increase – as I had expected – from 70.1% to 73.18%.  I had thought that a bump to 72% would be the maximum.  What this means for Berks is that prices have been “relatively” flat for the past year – and we’ve really seen values decline about 3%.  Not a bad number, when you consider the number of Short Sales, Foreclosures, and REO’s that have sold in the past year.  In fact, the bulk of properties selling have been what would be called “distressed” properties.

Chester County has seen a slip in prices as well – and therefore, an increase in the ratio.  Chester County residents will see the ratio move from 2009′s number of 55.4% up slightly to 56.04%.  Chester County has seen prices really remain flat, and I would suspect, we’ve seen the bottom here.

What does all of this mean?  Well, the Common Level Ratio is the percentage of your property’s CURRENT MARKET VALUE that you should be taxed on.  Basically, if you have a property worth $100,000 in today’s real estate market, your tax assessment should be $73,180 (Berks) or $56,040 (Chester).  If you have a newer home – one built in the past 7-10 years, you’re likely assessed too high – and should appeal, if you haven’t already.

Berks County would assess new construction at 100% of the purchase price, until 2005, when they reduced it to 80% – even though the ratio was 75%!  So, if you bought in 2004, and paid $400k for a home…. Berks County taxed you on approximately $400k – while you should have been assessed at, or about, $300k!

As you’ve seen on my blog – or in my newsletter – I assisted 60 clients with appeals last year – and will be doing more this year.

So, if you – or someone you know, needs help with property taxes, let me know.  I’ve also arranged for an appraiser to do appraisals at $250 ($450 value) for this – in the event we don’t have comparable sales in your area.

 

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