City Requires Higher Tax-data Accuracy in Real Estate Ads

www.baltimoresun.com/business/realestate/bal-md.property19may19,0,5952710.story
baltimoresun.com
City requires higher tax-data accuracy in real estate ads
By Julie Bykowicz julie.bykowicz@baltsun.com
May 19, 2009

A new Baltimore city ordinance requires the disclosure of more-accurate information about property taxes in real estate advertisements - an effort to clamp down on misleadingly low figures that can cause panic for buyers when they realize they have to pay far higher taxes than the previous owner.

The ordinance takes effect in about three months and means that ads may not state the current owner's taxes, which can include homestead credits and other tax breaks that do not transfer to the buyer. Instead, tax figures in ads must be a reflection of the property's most recent assessment multiplied by the city property tax rate of $2.268 per $100 of assessed value.

Mayor Sheila Dixon recently signed the ordinance, the council learned at a meeting Monday night.

Councilman James B. Kraft, who drafted the legislation, described the new measure as truth in advertising. "All of us around the harbor were hearing about this issue for years," he said, referring to other council members. Particularly in Canton, which is in his district, some sellers had been in their homes for 30-plus years, meaning their assessments and tax credits were not a true picture of what buyers would have to pay, Kraft said.

Kraft said he'd seen ads for properties listed at more than $1 million claim property taxes of about $7,000 when in reality the bill would be closer to $25,000. The misleading tax information was "causing all sorts of problems" when the new owner was faced with a higher assessment and none of the tax benefits.

Carolyn Cook of the Greater Baltimore Board of Realtors said her group worked with the council to develop a workable policy. At first, she said, the council asked for the ads to predict what the taxes would be the next year for a new owner - an "onerous task," she said, because houses are assessed at different times, usually once every three years.

Cook said the council decided to use the same formula used by the Metropolitan Regional Information Systems Inc., the company that runs the region's multiple-listing service.

She acknowledged that property tax promoted in some real estate ads "creates a lot of confusion among homeowners and others" because it was often pulled from the owner's last tax bill. As an example, she said, a tax bill for an abandoned home would be far lower than after it's renovated and sold - yet the figure for the shell kept popping up in ads.

"People seeing the ads weren't always making the connections," Cook said.

Getting Back to Normal

Ascending a mountain either by foot or by car can be exhilarating. We take in the incredible view for a while and then we come back down from the peak to a plateau. In other words, back to the normal view of the world.

Such has been the residential real estate market for the last five years. In our area, we reached the top of the peak at the beginning of 2006. And, all the way down from the peak, the media has chronicled every decline worrying sellers and buyers.

The latest Case-Shiller Home Price Index for our area shows that home prices have dropped 31% since the peak over three years ago. That statistic sounds shocking, however, the report shows home prices have simply returned back to the March 2004 levels when homeowners were very happy with the value of their property. We need to remember in just the 18 months from March 2004 to September 2005, there was a sharp 41% increase in prices due to very low inventory. So a drop to 2004 price levels is more like getting back to normal.

Another aspect of housing that is getting back to normal is mortgage-lending qualification. We hear concerns about lower qualification ratios and higher down payments that were ignored previously. We now understand that returning to previous reasonable standards is prudent. With a return to these standards and lenders willing to lend, the historically low interest rates are making today's mortgages even better than normal.

These and other factors are the reasons that a recent Gallup poll found that 71% of Americans think now is a good time to buy a house. If now is the right time for you or anyone you know, please allow me to assist in any way I can.

Feedback From My Most Recent Sale!

Magan was the perfect Realtor to guide me through the whirlwind of first-time home-buying. She was conscientious and timely in pointing me in the right directions along the way and in getting me good professional advice I felt I could trust, when I felt clueless .

When I'd send a panick-ish email, she was there on the phone checking up on me moments later. She outlined the process beforehand and then kept me apprised of every step along the way, even when I wasn't expecting it! She was at my back at every turn, making sure my best interests were being taken care of.

I'm recommending her to everyone in sight who utters "looking" or "selling"! She takes her clients' interests very seriously. I can't wait to show her the place she helped me find.

Sara Anderson

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The Perception of Value

Pricing and negotiation in residential real estate is based on perception of value. There are two sides to the perception - how the seller sees the house and how the buyer sees it - and there is usually a gap between them.

The seller has a great deal of emotion invested into the house. They have a price in mind based on how much they paid for the house, how much they have invested in their property during their ownership, previous sales of similar properties and what they need to complete their future plans. And, above all, the emotions they feel towards the home have a significant impact on what they decide is the asking price. Many times the seller wants a higher than market price because they feel the house is worth it.

On the other side, the buyer's perception of value is not based on any of the above. The condition, curb appeal and interior presentation of the house either enhance or decrease the buyer's desire for the house. The price range is determined by the mortgage qualifications and their knowledge of market conditions.

What does this mean to buyers? In former appreciating markets when inventories were low, buyers had to compete for the few houses available and bid prices up. In the current depreciating market with high inventories buyers know they are in control of offering prices. However, when buyers see what they perceive as a very well-priced home that exactly meets their needs; they will be competing with other buyers who also see that good value resulting in higher offering prices.

What does this mean to sellers? To realize the highest price in today's depreciating market, sellers need to see their house as buyers would. They need to analyze market data and also learn what buyers are actually paying today. Sellers need to have the condition and look of the house staged in a way that buyers see the house, not the clutter. They need to offer a home warranty to take away buyer uncertainty about the working components of the home. In short, the price must reflect current market conditions. When first placed on the market, it should be one of the very well-priced homes that attract many buyers who could compete emotionally for the home.

If you or someone you know would like advice as a seller or a buyer in today's market, I am always ready to assist with my real estate expertise.

What My Clients Are Saying!

I just had to share this great email I received this morning! This is from a Realtor in NY who referred his daughter and boyfriend to me just recently. We have been running around Canton, Fells Point to try and find them the perfect place and having a great time doing it.

Hi Magan,

Every conversation I've had with Lindsay and Chris since last Thursday has referenced you in some way. Lindsay and Chris truly appreciate your help. The Dad side of me says thanks for taking care of my kids. The realtor side of me says thanks for being so effective and professional!

Best regards,
Cal

I Have Now Officially Earned My ABR Designation!

I am so proud to announce that I have earned my ABR designation! What is this and what does it mean for my buyers?

The Accredited Buyer’s Representative (ABR®) designation is the benchmark of excellence in buyer representation. This coveted designation is awarded by the Real Estate Buyer’s Agent Council (REBAC), an affiliate of the National Association of REALTORS®, to real estate practitioners who meet the specified educational and practical experience criteria.

The ABR Courses I took in order to gain such a designation were incredibly insiteful and I highly recommend this to my colleagues to obtain their ABR designation. The more you know, the better you can help your buyers throughout their homebuying experience.

My next step will be taking the CRS designation. I look forward to gaining as much knowledge as possible every step of the way!