Do You Want A Real Estate Transfer Tax?

September 2008

Arizona voters will decide on a new initiative called "Protect Our Homes" on the Nov. 4, 2008, ballot. This initiative is an important measure that will constitutionally prohibit your home from real estate transfer taxes (RETT).  A campaign is under way that will give you, the voter, a unique opportunity to vote YES to say NO to real estate transfer taxes. Below is FAQ about RETT and the campaign.

A real estate transfer tax (RETT) is a state or local government imposed tax that is collected when you transfer ownership of your home, land or commercial real estate. Typically, once the tax is initiated, the rate can be increased by the state, county or city at any time.

Why are Transfer Taxes Proposed?

Too often, this form of taxation serves as a new source of revenue to balance a government's bloated budget. Once this type of tax is put in place, no matter how low the tax rate is in the beginning, it always ends up being raised.

What concerns does the RETT bring to homeowners?

IT'S DOUBLE TAXATION!
Governments already collect taxes on your property based on the property's value. This new tax would unfairly cause a second tax to impact your home or property.

IT DAMAGES YOUR EQUITY!
Since the tax is assessed against the total value including the amount you owe on your mortgage(s), the overall equity earned by the seller is decreased.

IT SLOWS AN ALREADY SLOW MARKET!
In the current slow market, a transfer tax would make it more difficult for people to buy or sell homes. Once a transfer tax is put in place, it can be raised at any time. This costs people buying or selling their homes even more money.

IT IMPACTS LOW INCOME HOUSEHOLDS THE MOST!
This tax imposes a higher tax burden on lower income households that typically spend a larger percentage of their income on their home.

How much will the tax amount to?
The estimated tax is 1.5%. AZ state tax and .45% local tax. equalling 1.97%. in RETT.

How popular is RETT across the nation?
Currently, there are 36 states that have some form of a real estate transfer tax - ranging from 1% to 2%.

This could add anywhere from $500 to $20,000 to the closing costs on your home! This hurts both sellers AND buyers.

While a majority of states have a real estate transfer tax, many states are currently working to repeal or prevent a real estate transfer tax. States like Washington, North Carolina, Texas and Wyoming are among the most recent states to take action to stop the double taxation of their homes.

On a personal note, I am not in favor of any new taxes.. This one is no different.. I am in favor of arranging a money management class for our lawmakers so they can learn how to better handle taxpayers' hard-earned money. Instead of asking working people for more money, politicians should learn how to better prioritize spending of tax dollars and cut costs whereever possible.

The changes could be made in areas as simple as our elected officials' business travel habits. Here are a few suggestions to our politicians:

1   Fly coach instead of first class.

2   Order a glass of water instead of an expensive wine.

3   Reserve rooms in a two- or three-star hotel, not a five-star resort.

When I see that these politicians live a frugal, simple lifestyle to conserve the tax dollars entrusted to them, I may reconsider my vote. But until then, I say NO to new taxes -- and most certainly, NO to double taxation on real property.

Visit www.protectourhomes.com for more information.

Is it Really a Bad Time to Sell?
by: Maria Hass

July 2008

Most people would probably say, "This is a horrible time to sell a home." But as a Professional Full-Time Realtor who works constantly with buyers and sellers and watches the market daily, I would beg to differ. The current market offers selling opportunities as well. Let's look at the reasons why:

1. Supply and Demand - The inventory of homes for sale in Metro Phoenix has decreased for the eighth consecutive month since October 2007, when we topped out at almost 58,000 homes, down to about 52,000 in June of this year. Also, buying trends increased for the fifth consecutive month this year. This means that the supply of homes for sale is decreasing and home sales are increasing. The Metro Phoenix market continues to improve as sellers find less competition when selling homes than last year.

2. Home Appreciation - Arizona homeowners who have owned their homes for five years or more will find themselves ahead of their investment. Arizona is one of the leading states in home appreciation with an average of 90 percent appreciation in value over the last five years -- about 18 percent annually during that time.* The average real estate appreciation across the U.S. is 3 to 5 percent annually. Based on this figure, Arizona homes have appreciated 13 percent more per year than the national average.That's great news for homeowners in Arizona -- and while sellers think that they are selling for less, they are actually selling for more when taking a realistic look at average real estate appreciation.

3. Reduced Equity - Sellers who have little equity in their home or are selling in a neighborhood dominated by foreclosures may actually find it profitable to sell now if they want to buy a bigger home at a great price in a desirable neighborhood. There are buying opportunities with short-sale, bank-owned and motivated sellers who may agree to pay closing costs at prices up to 20 percent below market value. Whatever you did not make in selling your home you can make up with instant equity based on the value of the new home. You can get in on a new home with little money or earn instant equity if you are careful about what you buy and do some homework.

4. Sell with Confidence - Homes are selling in Metro Phoenix. There are always people looking to buy homes in the Valley. Arizona has a promising economy and our growth makes real estate values more likely to rebound faster here than in other states.

To sell a home in today's market, it is necessary to price your home realistically and stage your home to make it stand out above the rest to attract the pickiest buyers. Get the help of a professional Realtor to offer advice on what it takes to sell a home in today's market. If you do all the right things, your home will sell.

5. Professional Experience - My professional experience offers encouraging news about what is really happening in today's market. Recently, I listed a home that received an offer after only two days on the market. Another of my listings had an offer in just two weeks. I am currently working with buyers who have yet to find a home they like that has not had offers from multiple bidders.

Selling or buying a home is not about the market, it is about your plan. If you have a good plan, you'll do just fine.

*Home appreciation may vary depending on the location of your home in Arizona, but still exceeds the national average of real estate appreciation.

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TIPS ON HOW TO BUY A HOME AT A GREAT PRICE IN TODAY'S MARKET
By: Maria Hass
June 2008

If you are looking to buy a home at a great price, this is the perfect market to do so.  Below are some tips that would help you purchase a home at a bargain price and not let someone else get it.

1. Location: There are lender-owned homes, pre-foreclosed homes or homes owned by regular sellers that are up to 20% below market value. Unfortunately, price is not everything. Location is just as important. Areas surrounded by foreclosed homes are likely to dip in value much faster than other homes with hardly any distressed sale.

2 Get a pre-approved LSR:  A loan status report (LSR) is a one page document showing how much home you can afford. An LSR is required when you make an offer to a home. It is common to see multiple offers on homes that are priced very low a few days after it's on the market. Depending on the seller, either the bank or the owner of the home may take the offer of the strongest buyer and not necessarily the highest priced offer. A strong buyer is pre-approved for the loan. By being pre-appoved, the buyer has submitted the required documents to the lender and has met the conditions of the lender. It is a good idea to get pre-approval by the lender.

3.  Get Real: Once you are pre-approved and found a house at a whopping price, it is time to make your best offer. If you are dealing with a bank as the seller, chances are they don't have the time to go back and forth with your offer and a better and stronger offer may come in while your offer is reviewed. If it is the house for you and you like the price, make a decent offer and a clean offer. Once the market turns around, you will be grateful that you did.. Otherwise, lose the house to someone else and go stand in line for a next deal to come by.

Finding a home at a great price, may offer challenges.. Consult a trusted and knowledgeable Realtor in your area. He or she can simplify the process for you and manage your expectations.

Foreclosure frenzy! Is it worth it?
By:Maria Hass
May 2008

Like any other human being looking for a bargain, I was curious for myself and for my clients to find out what a foreclosure real estate auction is all about. So, I recently decided to attend one of Arizona's largest foreclosure auctions of lender-owned homes.

The auction attracted a standing-room-only crowd in a huge ballroom at a prestigious hotel - about 1,000 frenzied people attended, most of them unfamiliar with the auction process and not represented by a professional Realtor. Still, all were thinking they could get a great bargain.

To bid, the buyer was required to present a cashier's check of $5,000 up-front. A five percent premium of the bid price is paid by the buyer and added to the final bid price. And the successful bidder is required to pay 5 percent deposit to move the sale forward.

Lots of people are hooked on this marketing technique. People were bidding properties up based on historic high values that are outdated based on today's market. And their adrenaline surges as they attempt to win what they think is the best deal in town.

But can buying at a foreclosure auction really net you the "Deal of the Century"? Let's compare the differences between this auction and a traditional real estate sale.

Lender-owned Foreclosure Auction

1. Buyer pays 5 percent premium to buy a house.

2. Buyer is required to present $5,000 cashier's check to bid and purchase.

3. Buyer is required to pay 5 percent down payment on a successful bid.

4. Seller sets a reserve price on every property. So, Seller will sell the home for the price they want and is under no obligation to sell below the reserve price.

5. Most Buyers' interests are not represented or protected by a licensed Realtor.

6. Opportunities to view properties limited to two or three weekends.

7. Buyer selects from a limited inventory of roughly 400 homes.

8. Due diligence and all forms of inspections to be done prior to bidding.

9. Recent comparable sales prices are not available.

10. A majority of the homes for sale need work and are not turn-key ready. Most failed to sell via the Multiple Listing Service (MLS) because they were competing with homes that are better-priced and in better condition.Seller does not pay any of the buyer's closing costs.

11.  Seller does not pay any of the buyer's closing costs.

12.  A successful bidder signs a 21-page lender designed Purchase agreement that is pro-Seller.

13.  All homes are sold AS-IS; Seller will not make any repairs.

14.  Buying a home is based on a quick decision at a pressure-packed event, not    a careful process.

Traditional Real Estate Sale

1.  Buyer pays NO premium to buy a house.

2.  Buyer is not required to show any money to make an offer. However, Buyer should be pre-qualified by a lender.

3.  Buyer may qualify for 100-percent financing with no money down. Typical earnest money for a conventional loan is one percent of the purchase price.

4.  Seller may not always set a firm price on the home.

5. Buyer negotiates down on the price instead of up.

6.  Most buyers receive professional guidance from a licensed Realtor who protects their interests.

7.   Daily access available to view properties of interest.. Buyer selects from roughly 56,000 homes in the Phoenix-area market.

8.   Buyer is given a 10-day inspection period after an accepted contract with an option to withdraw.

9.   Recent comparable sales are available 24/7.

10.   Homes for sale vary in condition, price and financing situation.

11.   Seller may pay for Buyer's closing costs.

12.   Buyer signs a 14-page Arizona Association of Realtors (AAR) purchase agreement designed to protect both the Buyer and Seller.

13.  Seller can agree to make repairs requested by buyer at seller's cost.

14.   Buying a home is a careful process not an event.

In my opinion, after finding out what the homes sold for and factoring in all the added costs (Buyer's premium, closing costs, repair costs), a majority of the homes in the auction sold for a fair price - but not at the bargain prices many would think. The Auction requirements seemed pro-Seller to me and only get more stringent as the process continues.

In summary, a traditional real estate transaction with representation by a professional Realtor offers the buyer protection, professional guidance and savings that a foreclosure auction may not.

  Six Signs you're Ready To Buy
by Michelle Dawson
April 2008

Figuring out whether you're ready to buy a house, whether you're a renter or are aiming to move up or size down can be a daunting task. But there are signs that will indicate whether you're ready to take the buying plunge.

So are you ready to make the move?. You might be if you....

• Are familiar with the market. If you've been paying attention to how much houses are listed for in the neighborhoods you're eyeing and have a realistic view of how much a house will cost you, you're in good shape.. But if your'e dreaming about that big corner house with no clue about it's asking price, you may want to spend some more time becoming familiar with the market and how much houses are going for.

• Have the money for a down payment and closing costs The down payment is a percentage of the value of the property.. Freddie Mac says the percentage will be determined by the type of mortgage you select.. Down payments usually range from 3 to 20 percent of the property value.. Also, you may be required to have Private Mortgage Insurance (PMI or MI) if your down payment is less than 20%.. Closing costs include points, taxes, title insurance, financing costs and items that must be prepaid or escrowed and other settlement costs.. Generally, buyers will receive an estimate of these costs from your lender after you apply for a mortgage.

• Know how much you can afford Freddie Mac says that as a general guide, your monthly mortgage payment should be less than or equal to a percentage of your income,. usually about quarter of your gross monthly income.. Also, your income, debt and credit history go into determining how much you can borrow.. As a general rule, your debt-credit card bills, car loans, housing expenses, alimony and child support should not be more than about 30 to 40 % of your gross income.

• Know what additional expenses will come with owning a home. This includes homeowners insurance, utility bills, maintenance costs, roofing, plumbing, heating and cooling.

• Have your credit in good shape and make sure your credit report is accurate Potential lenders will view your credit history -- how much debt you've accrued, how many accounts you have open, whether your payments are made on time etc. to determine whether they'll give you loan.You should get a report from each of the three credit reporting companies:. Equifax, Experian, and Trans Union.

• You haven't made any recent major purchases, particularly a vehicle.  If you do, you may have a harder time getting a loan.

Once you have this in place, the next steps is to hire a real estate professional and getting pre-approved for a loan. This way you will know if you are approved and how much you can spend on a house.. It also puts you in a stronger position once you make an offer on a house.

Is Buying a short-sale property right for me?
By:  Maria Hass

March 2008

"Short sales" and "foreclosures" are words synonymous with real estate nowadays. Below are answers to frequently-asked questions about short sales and foreclosure to help you find out if a short sale is right for you when considering a home purchase.

1. What is a short sale?

A home labeled as a "short sale" indicates the current homeowners owe more on their mortgage than what the home is worth. The difference between the two is called a "short." The short is a debt forgiven by the bank in a successful short sale.

2. When does a short sale occur?

A short sale can be initiated by the homeowner anytime he or she foresees a hardship in paying the mortgage. This may occur prior to or during missed payments. After three months of missed payments, the lender sends a notice of trustee sale to the homeowner detailing the date his/her property will be sold in a public auction. If the property does not sell in the auction, the lender takes back the property. At this point the home is called "REO" -- Real Estate Owned or bank-owned property.

3. Where can you find the best foreclosure deals?

There are three ways you can purchase a property in foreclosure. First is the pre-foreclosure or short sale. Second is a government-held public auction and third is the REO stage.

Depending on your expertise and your goals, any phase can offer a rewarding deal for you.

In a short sale, the buyer negotiates with the seller and the bank, although all negotiations are lender-approved. Short sale homes typically need some work and may sometimes appear neglected. Responses to offers may take a few days to up to three months, depending on bank policies and previous paperwork done on the property. A short sale may be for you if you have time to wait on the response and the money to make any repairs.

A public auction might be for you, if you are confident in how the bidding process works. However, you may have to bid on a property "blindly," because many homes in a government auction are not available for showing unless they are marketed publicly prior to the bidding.

Finally, REO properties can be marketed, among other ways, via a private auction or through the MLS. The bank or listing agent typically may have cleaned and retouched the home to make it look appealing.

There are many REOs that are being sold for 10- to 20-percent below comparable homes. Banks are not in the business of selling homes. The sooner they get the homes off their books, the less costs they incur. For this reason, banks may be open to negotiate on price. REO homes are sold as-is, without repairs and without any disclosure of the condition of the property. When buying a home in foreclosure, the standing policy is BUYER BEWARE!

4. Are all short sales successful?

No.  The lender may decline a request for a short sale by the homeowner for several reasons, including:

• The lender determines that the homeowner is not facing a true hardship and can continue making mortgage payments; or

• The lender believes it will profit more if the home is sold as an REO than as a short sale.

• A common issue among Realtors listing a short sale is trying to hold on to the buyer who made an offer.  Because of the length of time it takes for a response from lenders, it is common for buyers to walk away from an offer to look for another home.

5. Where do I find out about short sales or foreclosure homes in my neighborhood?

Realtors have access to a list of short sales and REOs marketed via MLS.  You may also look online for websites such as Realtytrac.com to get a list.. This website offers a free trial but charges a monthly fee to continue using it.  You may also visit your county office to see a list of foreclosures in the area you are interested in,. or visit infoclosure.com to subscribe to an. up-to-date list of foreclosures. This website also offers free courses on short sales, auction process and foreclosures.

If you are thinking of taking advantage of the buying opportunities in the current market, try seeking the expertise and experience of a trusted and knowledgeable Realtor. He or she will simplify the process for you and direct you to the best deals in the areas you are considering.

Putting the Media's Negative Real Estate News in Perspective

By:  Maria Hass
February 2008

I know you're reading so many negative stories about the housing market. But don't let it overshadow your enthusiasm of realizing your ultimate goal of home ownership.

1. Real estate is a long-term investment.. The boom created a misconception that real estate is a high yield, short-term investment. It's not. It is a long-term investment with the benefits of home ownership and equity building.

2. There's no such thing as a bad market. Regardless of where we are in the cycle, there are always plenty of people ready to buy and sell. Today's market is not "bad," it is an opportunity for smart investors to snatch up deals. Some areas hold their values better than others. Talk to your trusted Realtor to find out which areas are desirable areas to get the best deal.

4. The economic indicators remain good. Phoenix is the second fastest-growing metropolitan area in the nation. Unemployment remains low, and interest rates are at a historic low. As a whole, Arizona has a strong and promising future.

5. Bad news should be put in. . perspective. Every foreclosure is a tragedy. But when newspapers talk about foreclosure spikes, they ought to provide context. The problem lies among sub-prime loans that account for less than 10 percent of homeowners.

6. The current real estate market offers opportunities for smart investors not speculators. It is the time to ask yourself: Are you an investor or a speculator? An investor buys a property at a discounted price with long-term plans of holding it. A speculator foregoes his buying decision to wait for something that is not guaranteed. The investor, who has a plan, comes out ahead.

7.  Home Sales vs. Home Values are not the same. The media reported recently that home sales nationwide plummeted to 26 percent -- the worst in many years. What the media failed to report is that home values declined only about 3 percent in some areas like Chandler, Tempe &Scottsdale in 2007. As an investor, appreciation of your investment is what counts. Home sales don't mean anything unless you are selling your home. You haven't loss any money yet unless you sell.

If you plan to hold your investment for at least three years and have enough money in reserve for a down payment and closing costs, this is a great time to buy. Arizona real estate is on sale.. . Opportunities like this don't come every year! Buy when no one is buying. When people start feeling good about the market, you know you have missed the boat.

Quotes of the month:

"There comes a time when one must take a position that is neither safe, nor popular, but he must take it because his conscience tells him it is right."

Martin Luther King

"He that is overcautious will accomplish little."

Freidrich Won Shiller

"Nothing comes down forever."

Wayne Kandas, Financial Radio Show Adviser

"If 10 percent decline worries you, you should not be investing."

Rey Lucia, Financial Talk Show Host