Answers to an Inaccurate Property Tax Assessment

Each year, homeowners receive a notification of their property tax assessment, which, when combined with the local tax rate, determines how much they owe in property taxes. While this process is meant to fairly reflect a home's value, assessments are not always accurate. If the valuation is incorrect, homeowners may end up paying more than they should. Fortunately, you have the right to challenge the assessment if you believe it is inaccurate.

Here are some of the most common reasons a property tax assessment may be incorrect:

1. Overvaluation - Assessors estimate your home's market value, but if they overvalue it, your taxes will be higher than necessary. This can happen if they rely on outdated or incomplete data or if home values in your area have declined since the last assessment.
2. Errors in Property Information - Mistakes in the assessor's records can lead to an inflated value. Common errors include incorrect square footage, an inaccurate number of bedrooms or bathrooms, or outdated details about renovations and improvements. If the records show more features than your home actually has, you may be paying too much in taxes.
3. Comparable Sales Discrepancies - If similar homes in your neighborhood are assessed at a lower value, your home's assessment may not be consistent with market trends. Assessors use comparable properties to determine value, but if they fail to factor in differences�such as location, lot size, or condition�it could lead to an unfairly high assessment.
4. Market Value Decline - Real estate markets fluctuate, and if your property's value has dropped since the last assessment, your tax bill may not reflect the change. Assessors do not always adjust values quickly enough to keep up with market shifts.
5. Damage or Deterioration - If your home has suffered significant damage�such as structural issues, fire damage, or foundation problems�it could be worth less than its assessed value. If these factors aren't considered, you may be overpaying.
6. Incorrect Classification - If your home is classified incorrectly�such as being assessed as commercial property instead of residential�it can result in a much higher tax bill.
7. Exemptions Not Applied - Many homeowners qualify for tax exemptions, such as homestead, senior citizen, or veteran exemptions. If these were not applied, your tax bill could be higher than it should be.

If you believe your property tax assessment is incorrect, you have the right to challenge it. This typically involves gathering evidence, such as recent comparable home sales, correcting errors in the property records, or providing proof of market decline or damage.

Your real estate agent can be a valuable resource in this process. They can help you find comparable sales data and provide insights into market trends. If you have questions about your property's value or the process of appealing your tax assessment, reach out to your agent�they're there to help!

The Opportunity Cost of Delaying Homeownership

Opportunity cost is the value of the next best alternative that you give up when making a decision. In real estate, this concept plays a crucial role for buyers who are delaying to purchase a home due to high interest rates and rising home prices. The question is: What is the cost of waiting?

Many potential homebuyers remain on the fence, choosing to rent instead of purchasing a home. However, by doing so, they may be missing out on one of the greatest wealth-building opportunities: home equity. Let's break it down.

Comparing Renting vs. Buying

Consider a renter paying $3,300 per month versus purchasing a $400,000 home with a 10% down payment and a 30-year mortgage at 6.76% interest. The total monthly mortgage payment (including principal, interest, taxes, and insurance) would be $3,526.68�higher than rent at first glance. However, this doesn't account for the financial benefits of homeownership.

• In the first year:
  The homeowner reduces their loan principal through mortgage payments, averaging $587.57 per month in principal reduction.
• The home appreciates at 3% per year, equating to $1,000 per month in gained value.
• Factoring in $2,000 in annual maintenance costs, the true cost of homeownership is reduced to $2,374.23 per month, less than the cost of renting.

Long-Term Equity vs. Investment in CDs

After 7 years, the homeowner will have built $165,062 in home equity through appreciation and principal reduction. Meanwhile, if the renter put $40,000 they have for the down payment into a CD earning 2.5% interest, it would only grow to $47,547...less than a third of the homeowner's equity.

The Cost of Waiting

The opportunity cost of continuing to rent instead of buying is significant. Even if interest rates or home prices seem high now, waiting means missing out on the long-term financial benefits of homeownership, including appreciation, equity buildup, and potential tax advantages.  Not to mention that home prices are expected to continue to rise because of the continued shortage of inventory and so are rental rates.

If you're on the fence about buying, let's discuss your options and look at a projection with your numbers to see if now is the right time for you. The numbers might surprise you!

The Real Cost of Waiting to Buy

If you're holding off on buying a home because you think prices are too high or mortgage rates will drop, you might want to consider the opportunity cost of waiting. While it may seem like a safer choice to keep your down payment in the bank or invest it elsewhere, the reality is that homeownership provides a powerful wealth-building advantage, thanks to leverage.

While homebuyers may not approach their purchase with the same mindset as an investor, it's important to recognize that a home often becomes the largest asset they own. Comparing the potential wealth position of alternative investments, such as CDs or stocks, versus homeownership highlights the financial impact of delaying a purchase and the long-term benefits of building equity.

Let's compare what happens when you put $40,000 into different investment options over the next five years:

	CD	Stocks	Home
Cash to Invest	$40,000	$40,000	$40,000
Yield/Appreciation	2.5%	7%	3%
Wealth Position end of 5 years	$45,256	$56,102	$126,211
Return on Investment	2.5%	7%	25.84%
Profit Taxed as	Ordinary Income	Long-Term Capital Gains	Exclusion Applies

 

Why Buying a Home is a Smarter Choice

1. Leverage Works in Your Favor
   • Unlike CDs or stocks, real estate allows you to control a $400,000 asset with just $40,000 down.
   • When your home appreciates, the gain applies to the entire home value, not just your initial investment.
2. Building Wealth Through Equity
   • With every mortgage payment, you reduce your loan balance, increasing your ownership stake in the property.
   • After five years, this builds up substantial equity that renting or investing elsewhere simply can't match.
3. Tax Advantages

• Gains from CDs are taxed as ordinary income, and stock gains are taxed as capital gains when sold.
• However, real estate enjoys a special tax exclusion...homeowners can exclude up to $250,000 (or $500,000 for married couples) tax-free when they sell, provided they meet IRS residency requirements.

What If Interest Rates Drop?  Many buyers worry about locking in a 6.63% rate today, hoping for lower rates later. But if rates drop, you can always refinance to a lower rate while still benefiting from early appreciation and equity growth. Waiting could mean paying more if home prices continue rising.

Bottom Line: The Best Time to Buy is When You Can Afford It

If you have the down payment and qualify for a mortgage, waiting could cost you thousands in missed equity and appreciation. Instead of sitting on the sidelines, let's explore how homeownership can work for you.

Seller Disclosures are about transparency

When selling a home, full transparency is key. Seller disclosures provide potential buyers with crucial information about the condition of the property, ensuring a fair and informed transaction. Understanding what must be disclosed and why it matters can help protect both buyers and sellers from unexpected issues down the road.

Seller disclosures are legal documents that outline any material defects in the property such as issues that could negatively impact its value or safety. While specific disclosure requirements vary by state and local law, common disclosures include:

• Past or present structural defects
• Completed repairs or renovations
• Natural hazards (flood zones, earthquake risks, etc.)
• HOA rules and restrictions
• Land-use limitations
• Missing essential systems or features
• Prior property damage
• Any known deaths on the property (where required by law)

Seller disclosures are important and serve a dual purpose:

1. For Buyers: They help potential buyers assess the property's condition before making an offer, reducing the likelihood of surprises after closing.
2. For Sellers: Providing full and accurate disclosures can help protect sellers from legal liability. By documenting known issues upfront, sellers reduce the risk of future disputes that could lead to costly lawsuits.

Most states require sellers to complete a Seller Disclosure Form or Property Disclosure Statement. These standardized documents vary in detail, with some states mandating extensive disclosures while others allow sellers to disclose conservatively. Your agent will guide you in completing the form accurately.

The exact defects that require disclosure depend on state regulations, but common items include:

• Foundation issues or structural damage
• Plumbing or electrical problems
• Appliances not working properly
• Roof leaks or aging systems
• Pest infestations
• Environmental hazards (mold, asbestos, radon)

While not mandatory, sellers may choose to conduct a pre-listing home inspection to identify potential red flags before listing. Addressing repairs in advance can increase buyer confidence and potentially lead to stronger offers.

If no material defects exist, a seller can state this on the disclosure form. However, if there's any uncertainty, it's always best to disclose. Failing to do so could lead to legal repercussions if an issue arises after closing.

In most states, disclosures must be presented before a buyer signs a binding contract. Some sellers opt to disclose earlier, such as during showings or open houses, to establish trust and set buyer expectations. Your agent can confirm the appropriate timing based on local regulations.

Withholding required disclosures can result in serious consequences, including:

• A buyer canceling the sale
• Legal action against the seller
• Financial damages or required repairs at the seller's expense

Honesty and transparency are the best policies when it comes to seller disclosures.

Seller disclosures are a vital part of the home-selling process, offering protection for both buyers and sellers. If you're preparing to sell, work closely with your real estate professional to ensure you meet all legal requirements. By providing full and accurate disclosures, you can foster buyer confidence, avoid legal issues, and facilitate a smoother home sale.

For guidance on navigating seller disclosures, contact your trusted real estate professional today!

Understanding the Differences in Level of Care

When working with a real estate agent, it's important to understand the level of responsibility they have toward you as their client. In almost all cases, when a seller lists their home with an agent, an agency relationship is formed, meaning the agent owes the seller a fiduciary duty - a high level of care and loyalty.

The same can apply to buyers when they enter into an agency agreement with their agent. However, some agents may work with buyers without an agency relationship, which means they are not required to act as fiduciaries.

Since each state determines its own agency laws, it's essential to know what kind of representation you're receiving.

Reasonable Care: The Basic Standard

At a minimum, all real estate agents must provide reasonable care, meaning they must perform their job competently and ethically. This includes:

• Providing accurate information about the market
• Assisting with paperwork and transaction details
• Meeting deadlines and following legal requirements

Agents working with buyers without an agency relationship are still required to follow state laws and act professionally but are not obligated to provide fiduciary-level loyalty, confidentiality, or full disclosure.

Example: A buyer is casually working with an agent who has not signed a formal agency agreement. The agent helps them view homes and answers questions but does not advise on negotiation strategies or disclose details about the seller's motivation. This is because, without an agency agreement, they are not required to act in the buyer's best interest.

Fiduciary Care: The Highest Level of Representation

When an agent has an agency relationship with a client, whether a seller or a buyer, they owe them fiduciary care - meaning they must act in their best interests at all times. This includes:

• Loyalty ... Prioritizing the client's interests above all else
• Full Disclosure ... Sharing all relevant information, even if it affects the agent's commission
• Confidentiality ... Keeping sensitive client details private
• Avoiding Conflicts of Interest ... Ensuring no actions benefit the agent at the client's expense

Example for Sellers: When a homeowner lists their property with an agent, that agent must act in the seller's best interests�pricing the home strategically, marketing it effectively, and negotiating the highest possible price.

Example for Buyers: A buyer who signs an agency agreement with an agent can expect full loyalty, negotiation strategies tailored to their best interests, and transparency about market conditions.

Why This Matters for Buyers and Sellers

In most instances, for sellers, an agency relationship is standard, ensuring full fiduciary protection from their listing agent.

For buyers, agency agreements secure a higher level of representation, ensuring their agent negotiates the best price, provides inside market knowledge, and advocates for them at every step. Without an agency agreement, buyers should not expect the same level of loyalty or disclosure.

Know Your Agency Relationship

Before working with an agent, ask:

• Will you act as my fiduciary agent or just provide reasonable care?
• What level of loyalty, disclosure, and confidentiality can I expect?
• What agreements are required in my state before we move forward?

Understanding the difference between reasonable care and fiduciary care ensures you make informed decisions when working with a real estate professional. If you're planning to buy or sell, let's discuss how I can represent your best interests every step of the way.

Real estate agency laws vary by state, and the level of care and representation you receive depends on the type of agency relationship established. Before entering into a written agreement, your agent can explain the specific duties they owe you, including whether they will provide fiduciary care or reasonable care based on your agreement. It is always recommended that buyers and sellers fully understand their agency relationship and the obligations it entails before proceeding with any real estate transaction.

If you have any questions about how agency representation works in your state, your real estate professional can provide guidance tailored to your situation.

The smart approach to online security

In today's digital world, protecting your online information is more important than ever. You likely have multiple accounts...email, banking, investments, and social media...all of which need strong, unique passwords. Trying to create and remember complex passwords for each site can be overwhelming. That's where a password manager comes in.

A password manager is a secure app that stores and generates strong, unique passwords for all your online accounts. Instead of struggling to remember dozens of complicated passwords, you only need to remember one master password.

Here's why using a password manager is one of the smartest security moves you can make:

1. Stronger Passwords - Password managers generate complex passwords using a mix of letters, numbers, and symbols. These are much harder to crack than passwords people typically create on their own. With a password manager, you won't have to worry about using weak or repetitive passwords.
2. Unique Passwords for Every Account - Using the same password across multiple sites is a major security risk�if one account is compromised, hackers could gain access to all your accounts. A password manager eliminates this risk by creating a different, strong password for each website or app you use.
3. Easy Access and Management - With a password manager, logging into your accounts is quick and hassle-free. Instead of typing in passwords or trying to reset them when you forget, the password manager automatically fills them in for you. This makes accessing important tools�like your CRM, email, and transaction software�both secure and convenient.
4. Secure Storage - Reputable password managers use strong encryption to protect your passwords. Even if the company storing them were to be hacked, your passwords remain encrypted and secure. This level of protection is far stronger than writing passwords in a notebook or saving them in a document on your computer.

Best Practices for Using a Password Manager - To maximize the security benefits of a password manager, keep these best practices in mind:

• Choose a trusted password manager ... Look for one with a strong track record of security, such as 1Password, LastPass, or Bitwarden.
• Protect your master password ... Since this is the key to all your other passwords, make sure it's long, unique, and never shared.
• Enable two-factor authentication (2FA) ... Whenever possible, add an extra layer of security by enabling 2FA for your password manager and other important accounts.

Stay Secure in the Digital Age

As a real estate professional, you handle sensitive client information daily. Using a password manager is an easy yet powerful way to keep your accounts secure and protect your business from cyber threats.

If you're fully embedded in Google's ecosystem and follow strong security practices, Google Password Manager is a convenient and secure option. However, if you need cross-platform flexibility, enhanced encryption controls, or additional security features, a dedicated password manager like 1Password or Bitwarden may be a better choice.

Taking this simple step will give you peace of mind, allowing you to focus on what matters most...helping your clients buy and sell homes with confidence.

Unlocking the Advantage of Assumable FHA & VA Loans

In today's high-interest-rate environment, homebuyers are looking for every possible advantage to secure an affordable mortgage. One often-overlooked opportunity is assuming an existing FHA or VA loan, especially those issued in the past few years when interest rates were at historic lows.

An assumable loan allows a qualified buyer to take over the seller's existing mortgage, including its remaining balance, interest rate, and repayment terms. FHA and VA loans are generally assumable, but buyers must meet the lender's qualification standards, just like they would for a new mortgage.

With interest rates currently much higher than they were just a few years ago, assuming a loan that carries a lower-than-market interest rate can be a game-changer for buyers. Here are some key advantages:

Lower Interest Rate = Lower Monthly Payments - If the seller's mortgage has an interest rate of 3% or 4%, assuming the loan means immediate savings compared to today's rates, which are often above 6% or 7%. A lower rate can translate into hundreds of dollars in savings each month.

Lower Closing Costs - Unlike taking out a new mortgage, assuming an existing loan typically comes with reduced lender fees and fewer closing costs, saving the buyer thousands at the closing table.

No Need for an Appraisal - Since the buyer is taking over an existing mortgage, there's often no need for a new appraisal, reducing both costs and potential delays in the transaction.

More of Your Payment Goes Toward Principal - Because the loan is further into its amortization schedule, a higher percentage of each payment goes toward paying down the principal rather than just interest, building equity faster.

One of the biggest hurdles with loan assumptions is that the seller's remaining loan balance may be significantly lower than the home's purchase price. This means the buyer must cover the difference between the sale price and the outstanding loan balance.

For example, a home is selling for $400,000 with the seller's assumable FHA loan balance is $300,000, the buyer needs to bridge the $100,000 gap between the sale price and the assumed loan.

If a buyer doesn't have enough cash to cover this gap, there are financing options:

• Second Lien Financing ... If the buyer puts down at least 10%, they may qualify for a second mortgage to cover the remaining difference. This could come from a conventional lender or even through owner financing.
• Home Equity Loans or HELOCs ... If the buyer can arrange temporary funding to close the assumption, they may be able to get a home equity loan or line of credit to fund the difference once the property is closed and in their name.

Navigating the Loan Assumption Process

While any FHA- or VA-approved lender can originate new loans, assumptions must be processed through the current loan servicer. Some lenders may not be familiar with the process and could discourage assumptions due to lower fees and longer processing times.

Buyers should be persistent if a lender is uncooperative, request to speak with someone who understands loan assumptions.  It is to a buyers' advantage to work with a knowledgeable agent who is experienced with assumptions and can help negotiate financing solutions and streamline the process.

If you're a buyer looking for lower payments in today's market, an FHA or VA loan assumption could be an excellent opportunity. While it requires careful planning to cover the price difference, the long-term savings from a lower interest rate can make a significant impact.

Thinking about assuming a loan or selling a home with an assumable mortgage? Let's discuss how this strategy could work for you!