The previous year’s value still matters when determining your pro rata share of the current year’s property tax. It will also give you a proportional point of reference. For instance, if the property’s current tax value is $600,000 and the taxes are $10,000, then you purchase the home for $500,000, you can probably “ballpark” the next year’s property taxes at $8,333.

Earlier this year, the Georgia Legislature passed property tax reform legislation that will have a monumental effect on property assessments. The bill is aimed at ensuring all Georgia properties are properly assessed at “Fair Market Value” and that property owners have guaranteed rights to appeal. The overall reform contained over 50 changes to the State law. From a homebuyer’s perspective, I think the most important aspect is the property’s “Fair Market Value” for the next tax year should be the current year’s selling price. It’s effective for homes bought in 2010 and later.

Senator Chip Rogers had this to say about his bill:

If you buy a home this year and you don’t do anything to it, whatever you paid for it should be your assessment for that year.

Many of the Metro Atlanta county tax assessors have been defying state law by overvaluing properties. They were all too happy reassessing “fair market values” when property values were escalating, but they don’t seem to think it’s a good idea during decreasing property values.

The “Fair Market Value” of a property, as defined by the GA Code is:

…the amount a knowledgeable buyer would pay for the property and a willing seller would accept for the property at an arm’s length, bona fide sale. OCGA § 48-5-2.

Last year, the AJC did an expose on how Metro Atlanta county tax appraisals are much higher than the “Fair Market Values.” The following quote from the newspaper demonstrates the disconnect some of the tax appraisers have between their misguided defintion of property value and the “free market’s” reality of property value:

Tax officials don’t dispute that, but they say they were reluctant to lower values as much as sales dictated because they worried about the resulting evaporation of tax revenues. And they simply didn’t believe values so low could possibly reflect the market.

Rodney McDaniel, Clayton’s chief appraiser, said this concern was impossible for him to ignore. In Clayton the median sale fell a stunning 43 percent. The county’s median appraisal change? Five percent.

“It’s going to be extremely difficult to match sales prices,” McDaniel said. “You will be severely depleting your [tax] digest.” The digest represents the total value of real estate in a county and is used to determine how much money local governments can expect from property owners.

If tax appraisals had fallen as far as sales prices, local governments would have been forced to consider the politically dangerous course of raising taxes, perhaps considerably, to make ends meet. Property taxes are the top source of local revenue for schools, cities and counties. Before this year, officials relied on them because they were supposed to be immune to economic downturns — unlike sales taxes and service fees.

The AJC nails it: the problem is that the politicians don’t want to raise the taxes. They’ve been beneficiaries of “back door” tax increases over the last decade, but won’t reduce property property tax appraisals in a down market. The State law doesn’t say anything about, “if the property values have dropped too much, just make-up an appraisal” or “pretend that selling prices don’t actually represent market value, to keep your tax digest up.” This caused the GA Legislature to step in and force the hand of the local counties into appraising property at the “Fair Market Value.”

The deadline to file your property tax appeal in Atlanta, Buckhead or Fulton County is April 1st, which has obviously passed for 2010. I’m in the process of appealing my property taxes. It’s a drawn-out process that I plan on writing about in future posts. Fortunately, for anyone currently purchasing a property in Georgia, the following year’s property tax appeal should be as simple as attaching a copy of your purchase price with the appeal.

Related posts:

1. Atlanta Property Taxes are Assessed at the Selling Price
2. Fulton County Property Tax Appeal Rant
3. Buckhead Property Tax Appeals
4. Fulton County Tax Appeal Timeline
5. 6 Homebuyer Tips for a Great Deal on Atlanta Homes

The estimated costs in the spreadsheet can vary widely. I also tried to include the most common line items. If you’re lucky, and negotiate well, your mortgage broker may not include all of them. Some extra items that might be on your closing statement, but not on this spreadsheet are: upfront discount points to lower your interest rate and reserves deposited with the lender. If you have any questions about the charges, please feel free to contact me.

Obviously, you’ll need to finalize your closing cost estimate with a mortgage professional as Atlanta closing costs can vary widely.

All information is believed accurate but not warranted. All rights reserved.

Related posts:

1. Georgia Home Buyer’s Closing Cost Calculator
2. Should you ask for closing costs?
3. 6 Homebuyer Tips for a Great Deal on Atlanta Homes
4. Georgia homebuyer tax credit
5. 5 key features of Obama’s loan modification plan

REALTORS, brokers, homeowners alike feel that this legislation has helped move housing inventory and has helped stabilize pricing. In turn, many believe it has reinvigorated slow real estate markets across America. As a result of this hugely successful program REALTORS everywhere have been lobbying Congress to pass legislation which would extend the $8,000 stimulus package until the end of 2010. The National Association of Home Builders (NAHB) and the National Association of REALTORS (NAR) are also lobbying that the extension to apply to ALL HOME BUYERS and not just first time buyers.

The NAR and NAHB have estimated that approximately 1.8 million first-time buyers will take advantage of the $8,000 first-time tax credit before it expires on November 30th. This program is expected to cost about $15.50 billion.

It will be interesting to see what happens with the legislation and how it impacts our markets.

If you have questions or are interested in taking advantage of the current stimulus package please contact me. I would be happy to assist you in finding your new home.

Related posts:

1. Stimulation of housing?
2. Update on the "Stimulus" Bill
3. Temporary Tax Breaks
4. Georgia homebuyer tax credit
5. 5 key features of Obama’s loan modification plan

Although I’ve had some experience with short sales, the whole concept is still a fairly recent phenomenon that requires any Atlanta agent to continually search for more information. I found a great article by the NAR outlining the basics of short sales. Here is an excerpt:

The rapid increase in the number of short sales, and the short sales process itself present a number of challenges for REALTORS®. Major challenges include:

1. Limited experience

Many REALTORS® are new to the short sales process; a difficulty which is compounded by many lenders’ lack of sufficient and experienced staff to process short sales. Even if the REALTORS® are experienced, most servicers are under-staffed and still not adequately trained, making negotiating a short sale particularly difficult.

2. Absence of a uniform process and application

Currently, both short-sales documents and processes are lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions.

3. Multiple lenders

When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing.

As a result of these challenges our members have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.

If you would like to see the rest of this article by the NAR, please click here.

I also found a great short sale article at Las Vegas Short Sales.

Related posts:

1. The Perils of Short-Sales
2. Bait and Switch Short Sales
3. Short Sales
4. Atlanta Pre-Foreclosures and Auctions
5. Bank Owned Properties For Sale

5 key features of Obama’s loan modification plan are described below.

1. Monthly payments - According to the plan, mortgage lenders should reduce the monthly payments to 31% of the borrower’s monthly income. While doing it, the lender should at first reduce the interest rate to as low as 2%. If it is not enough to reach the 31% target, then the lenders can extend the loan tenure up to 40 years in order to achieve the required aim.
2. Declining property values - The plan states that even if the property’s value declines, the borrowers can stay at their homes as long as they’re making their monthly payments.
3. Monetary hardship - Obama’s plan is specially meant for those who are undergoing financial hardship, which is the reason behind their risk of default. Therefore, in order to participate in the given plan, the borrowers need to sign an affidavit of financial hardship and also verify their income through necessary documents.
4. Cash incentive - This new loan modification plan has introduced cash incentives for both lenders and borrowers, who agree to work on a modified mortgage. However, neither party can receive the cash benefits until modified mortgage payments have been made for a minimum of 3 months.
5. Net value test - A mortgage lender is required to perform a net value test in order to assess whether or not a loan modification may be beneficial. The lender is expected to modify such a loan that intends to produce more cash flow for him/her.

This loan modification plan is expected to reduce the number of foreclosures for primary residences. However, time can only prove whether or not Obama’s mortgage modification plan is effective to avoid foreclosure as expected.

Related posts:

1. Lack of jumbo mortgages could be hurting Buckhead.
2. Short Sales
3. Georgia Home Buyer’s Closing Cost Calculator
4. New Administration trying to stifle the Buckhead housing market.
5. Should you ask for closing costs?

The Federal Reserve is working to hold down rates by purchasing upwards of $1.25 trillion in mortgage-backed securities and $300 billion in Treasuries. Mortgage rate premiums have declined substantially over the last couple of months even as Treasury yields climbed.

Source: Investor’s Business Daily (05/22/09)

Related posts:

1. The phase-out of the mortgage interest deduction
2. New Administration trying to stifle the Buckhead housing market.
3. Lack of jumbo mortgages could be hurting Buckhead.
4. 5 key features of Obama’s loan modification plan
5. Georgia Home Buyer’s Closing Cost Calculator

What they have decided to offer, for their upscale Buckhead condos, is unprecedented in the Atlanta condo market.

• Guaranteeing the value of the condos for the first three years. Buyers can walk away, during that timeframe, without any damage to their credit.
• Offering financing at 4% with only 5% down.
• Allow somebody who needs to sell a home, and puts 20% down on their Terminus condo, to live in the condo without payments for a year.

Cousins is responsible for some of Atlanta’s top condominium projects and commercial buildings. Obviously Cousins is confident in the future of Terminus as they are taking on a great deal of risk with these incentives. If you would like to hear more about their incentives or want to see some of the units at Terminus, please call me.

Related posts:

1. Unique Atlanta Home Search Solution
2. Georgia Home Buyer’s Closing Cost Calculator
3. Park Place Condominiums in Buckhead Atlanta
4. Temporary Tax Breaks
5. Buckhead Condos

“Though the added tax burden is only for the top income households, the unintended impact is lower home values for most homeowners. If prices for top end houses decline, then the price at the next rung of the housing market also needs to fall to attract buyers, and so forth.”

“California and Florida will be the top two states to take a hit from the changes in mortgage interest deduction. Stay tuned for the final impact results sometime next week.”

The article focused on California and Florida as the top states that will take a hit from this awful proposal, assumedly because there are a lot of expensive properties in these states. If the focus was on communities that would take a hit from the proposal, Buckhead would be at the top of the list. It’s time to call your elected officials, John Lewis represents Buckhead, and tell them that trying to torpedo the Buckhead real estate market won’t do the country any good.

Related posts:

1. Mortgage Rates Continue to Fall
2. New Administration trying to stifle the Buckhead housing market.
3. 5 key features of Obama’s loan modification plan
4. Georgia Home Buyer’s Closing Cost Calculator
5. Lack of jumbo mortgages could be hurting Buckhead.

You can get limited access to a website that I subscribe to through the Atlanta Journal Constitution. It’s called EquityDepot, and it provides pre-foreclosure information on Metro Atlanta homes. I’ve written about short sales and pre-foreclosures on my website. The AJC also has a great description of the whole pre-foreclosure / foreclosure process.

Here is the link to the AJC’s foreclosure page.

If you have any questions about the pre-foreclosure, foreclosure auction, or post-foreclosure process, and how you might find a good deal on a home in Buckhead or Metro Atlanta, please call me.

Related posts:

1. Buckhead Foreclosures
2. Short Sales
3. 5 key features of Obama’s loan modification plan
4. Short Sale Primer
5. Buckhead Foreclosures for September 18, 2011

Sometimes you have an “expert” friend that reminds you to “make sure you get the closing costs covered.” That friend will also take great joy in telling you, after your binding agreement date, how you missed out on the magic rebate of closing costs. To some extent the closing cost issue becomes a shell game. The sellers are only concerned with the check they receive at closing.

Generally, the sellers aren’t stupid and are going to look at your offer on a net basis (mortgage owed – purchase price – closing costs). If you’re offering $400,000 for the home and want $8,000 in closing costs, then it’s similar to an offer of $392,000.

I’ve had the following scenario happen a few times. Buyer writes an offer for $500,000 no closing costs. Seller counters the offer with $475,000. Then Buyer wants me to counter the seller’s $475,000 counter with a $485,000 offer and $15,000 in closing costs. You would be surprised at the difficulty I have explaining to the buyer that his two offers are exactly the same. This is the shell game aspect.

The real purpose of asking for real estate closing costs is when the buyers are short on cash and are essentially financing the costs by transferring them to the mortgage. If the seller would have agreed to a $500,000 purchase price, then agreeing to a $510,000 purchase price with $10,000 in closing costs leaves neither side better off, but the purchase price has been increased and in-turn the mortgage. That’s how the closing costs are transferred to a tax deductible, low interest mortgage.

The more expensive the home, the less likely they buyer is going to ask for closing costs in the offer. It’s considered a “cleaner” offer to simply negotiate on price and not introduce another unnecessary variable into the negotiations.

The Georgia Association of Realtors standard Purchase and Sale Agreement has an option to ask for a contribution toward closing costs. Some buyers will initially request that I ask for all closing costs to be paid. The standard contract does not allow for “all closing costs”, because it’s simply too open-ended. You’ll need to estimate your closing costs and then determine how much you want the seller to contribute toward that estimation. I developed a simple spreadsheet that will help you estimate your closely costs. If you’re in a situation where having the majority of your closing costs paid is mandatory, then you better speak with a mortgage representative.

I don’t have a problem with closing costs, but view them for what they are, a tool for financing some out-of-pocket costs.

Related posts:

1. Georgia Home Buyer’s Closing Cost Calculator
2. Homebuyer Closing Cost Estimator for Georgia
3. Short Sales
4. 6 Homebuyer Tips for a Great Deal on Atlanta Homes
5. Why use a Buyer’s Agent?