Archive for February, 2009

How Do You Lower Your Real Estate Taxes?

We all know that tax assessed value never keeps up with the market value.
In “the good ole days” when property was appreciating at alarming rates, we got lucky and saw our tax values way below the market value.  It would only typically adjust when you bought that new house and then it was capped at [...]

We all know that tax assessed value never keeps up with the market value.

In “the good ole days” when property was appreciating at alarming rates, we got lucky and saw our tax values way below the market value.  It would only typically adjust when you bought that new house and then it was capped at typically 15% increases per year.  Alternatively, if you took the “this old house” clause while  renovating your existing house, any increase in value was waived until you sold the property.

Now in this market of deflating home prices, my customers are buying properties for up to 75% off what the property sold for 2-3 years ago.  I have one customer that is buying a home that sold in 2006 for $840k for only $150k.  Unfortunately, now we are feeling the hangover from the years of double digit appreciation.  The tax values are just as upside down as the prices we are paying.

So, How Do You Lower Your Real Estate Taxes?

If you want an example of one official answer, here is the diagram from the Hennepin County Assessor’s office:

Got that?

I asked a few other agents on our team if they (or their customers) have had any success in negotiating with the Tax Assessor’s to lower their property taxes.  Here is what a few of them said:

Steve Howe from Minnesota First Home Buyers said:  “I actually spoke to the Hennepin County tax assessor for my district directly in December, when my wife and I filed for homestead on our house.

I knew that the 2008 assessed value was at $170,000, and we just bought the home this year for $122,000. Obviously some difference there.

However, after speaking with him for a few minutes, he told us that filing for a petition and getting a lower assessed value probably wouldn’t be worth our time and effort. Most of us know that the tax assessed values are about 2 years behind market value rates. So we’re just now seeing those assessed values come down from record highs a year ago (just like the market crashing 2-3 years back).

Our new 2009 assessed value came in the mail a few weeks ago, and it dropped from 2008-$170,000 to 2009-$139,000. On top of that, they also gave us a prediction of what the 2010 assessed value would be, and it is listed at $119,000. That’s more like it!!

So, as you can see, unless there’s a huge difference (more than $60,000) they are probably going to naturally adjust over the next year or two”

Bob with the MN Real Estate Team said:  “In November I requested this for a duplex my wife and I own in Edina. I contacted the assessor’s office and made an appointment with the assessor at the property. He came out and I walked through with him. The value came in much closer to market.  Earlier I did a similar thing with Scott county on my own home. The Scott county value is now spot on with a refi appraisal done in Dec. “

Then both Matt Siggerud, at www.mnrealestatesearch.com, and Jesse Grumdahl, at Minnesota Short Sale said that bringing a closing statement from your recent purchase or sale data from 2 properties that sold in the previous 6 months on the same neighborhood is hard for the assessor to ignore.

While this may seem like trying to save money on your Water Bill, it does pay off in the long run.  What if you could reduce your taxes by $100-200 per month?  On your investment property, that may mean the difference between breaking even and a decent cash flow.

Have you always wanted to buy investment property, but never knew where to start?
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Pitfalls of Investment Property Short Sales

Just when I thought I was out, they pull me back in.
-Michael Corleone

I have said it before:  I am done with Short Sales.  Unfortunately, I feel like Al Pacino in the Godfather III when he says:  “Just when I thought I was out, they pull me back in”.  I consistently say that I am not [...]

Just when I thought I was out, they pull me back in.

-Michael Corleone

I have said it before:  I am done with Short Sales.  Unfortunately, I feel like Al Pacino in the Godfather III when he says:  “Just when I thought I was out, they pull me back in”.  I consistently say that I am not going to sell my customers short sales.  Unfortunately, the allure of the attractive pricing gets me every time.

Here are some pitfalls that I have seen amongst deals that have closed and many that have not:

• Listing agent calls 2 days before closing, says there is a $3400 Minneapolis water bill on the property and the seller is NOT going to pay it.  Listing agent asks if my buyer would take care of it!
• Buyer puts in full price, non-contingent offer on nice tri-plex in NE Minneapolis.  Listing agent does great job of communicating with us weekly.  Countrywide goes through 8 BPOs, 4 negotiators, and countless phone calls.  6 months later, my buyer finally decides to cancel when they ask for another BPO.
• A deal had previously fallen through (because of buyer’s financing) on a townhouse in Apple Valley.  Great agent does a good job of repricing the property at the previously accepted offer price.  My buyer pays full price, no contingencies.  Bank delays several times, sends someone out to do a BPO who promptly claims the property is worth 25% more than the list price (and 15% more than any recent sale in the neighborhood), bank cancels sale after 90 days in the process.
• Buyer is purchasing multi-family property.  Seller has stopped caring about property and not collecting rent.  Between the first showing and the offer being accepted, one unit becomes vacant.  As part of our due diligence, we get copies of the rent rolls and the leases.  None of the remaining tenants have paid any damage deposit and two are now more than two months behind in rent!
• Real Estate Agent markets property in Neighborhood with many foreclosures.  She never tells me this is in fact a short sale until well after we have an accepted offer.  At the closing, we find out the house was actually sold that morning to a land trust who in turn was actually the group selling it to us.  They make a $25,000 profit on a $115k sale!

Investment Property Short Sales can be great opportunities to buy investment properties at greatly discounted prices.  You just need to be prepared for anything as it seems like they are making it up as they go.

Investment Property 101 Seminar

[ February 17, 2009; 6:30 pm to 8:00 pm. ] Let our experience get you started!

Spend just over 1 hour with us at this FREE investment property seminar.  Let us show you why over 80% of the wealthiest people in the US own real estate.  You will meet the experts that can help you buy your first investment property and be successful.

Register for the seminar [...]

Let our experience get you started!

Spend just over 1 hour with us at this FREE investment property seminar.  Let us show you why over 80% of the wealthiest people in the US own real estate.  You will meet the experts that can help you buy your first investment property and be successful.

Register for the seminar by filling out this quick registration form or call 612-281-5419 for more information.