Our real property taxes are paid annually.  You recieve a notice from the City Tax Assessor early in the year informing you of what your property is assessed, or valued, at. I recieved my assessed valuation the third week of January this year.

 Around May 15th, you’ll receive your tax bill which shows the value the city has put on it (assessed value), multiplied by the latest  “mill rate” or the multiplier the assembly and the Muni Budget has put in place.  This gives you the amount of tax due on the property that you own.

The taxes are due for the calendar year, January through December.  In Anchorage, they can be paid in two installments, but the installments are close to each other.  The first installment for the first half of year is due June 15th.  The second half is due August 15th.

If you pay the tax yourself, which you would be doing in you own your property “free and clear“, you’ll need to pay on the schedule above.  If you have taxes being escrowed and collected each month with your monthly payment, the lender will get your tax bill and you will get a copy mailed to you for your files that says “Do Not Pay”; that’s because the lender will pay it for you.

If the amount of money the lender has built up in their escrow amount is short, your monthly payment amount could be increased so their is enough money in the escrow account when taxes are due.  If your assessed value hasn’t changed in several years, that could happen.

When you sell the property, the taxes are generally pro-rated for the year by the title company closer so that the buyer pays the taxes going forward from closing and the seller pays the part of the year they owned the property.  If their is an escrow overage at the bank, the money is returned to the seller.

It all works out!  If you have any questions or comments on the process, just ask!

A good lender can discuss several loan options that may work for you

First there are different categories of loans.  For instance, Conventional loans; a conventional loan means this loan is not insured by a government entity, such as VA or FHA.  Generally speaking a conventional loan will have larger down-payment.  In fact if buyers get to the point in their financial life they can purchaser with 25% or more down, they won’t have “mortgage insurance” on their loan at all.  Mortgage Insurance is an insurance product that guarantees the top percentage of the loan in the event of a default.  Conventional loans with the 25% down payment are considered “self insured”, or the buyers have so much cash committed that the risk of default is very low.

An FHA loan is a government backed loan.  The program is intended for median priced homes and for buyers who need a lower down payment, usually about 4.5%  of the sales price.  Typically an FHA loan will allow the borrows dept ratio’s to be a bit higher than a conventional loan would be, meaning a person might have student loans or even a vehicle loan that pushes their “back end ratio” a bit higher than conventional loans allow.  Lenders talk in terms of buyers debt ratio’s; a front end ratio is the percentage of your income the new loan is of your monthly salary. The goal is 28% of your gross income.  The second ratio shows all of your debt and your new proposed house payment as a percentage of your gross income.  Lenders like a total debt ratio of 36% of your gross income.

 A VA loan is backed by the Veterans Administration, another government entity.  Because veterans have given up a few years of their life to their country and have made very little money in those years, the government insures loans to qualifying veterans for little or no down-payment, or 100% financing.

Many loans are a hybrid, meaning a programs where the best parts of one program are sandwiched with another program  Such is true with many Alaska Housing loans; Alaska Housing might offer a lower interest rate for State of Alaska military veterans, and combine with the Federal VA to give a zero down loan, giving the borrower not only a better interest rate, but no cash down-payment.

The best thing for a person to do is to meet with a mortgage lender, or two, give them your financial information such as your employment history, the funds you have available to you and other financial information.  A good lender will suggest several loan instruments to you so you can make the decision on which loan gives you the best flexibility.

Of course, contact me if you would like a mortgage banker / lender referral on where to start this process.

Crunch your numbers! Price well if you want to sell!

need objectivity.  A buyer is looking for the best property they can find at the best price.  You need to be able to see your property from the eyes of the property buyer.  Maybe you should ask your realtor to show you a few of the top competing properties.  Yes, look at “short sales” and foreclosures too.  Your buyer will be checking those out too.

You have your work cut out for yourself.  You can drop your price, or improve your homes condition.  If you can’t afford to lower your price, it might mean you need to update your kitchen and/or bathroom;  It might be as easy as removing old wallpaper, painting and replacing carpeting. 

2) Your property won’t sell because it shows poorly.  This could mean just about anything, from the 80 pound Rottweiler barking and drooling, to the smell of old cigarette smoke aging inside the home for years.  Maybe your carpet is showing wear patterns down the hallway or stairs. 

3) Your property won’t sell because your photos aren’t quality.Most buyers start their home search on thee Internet, so you property had better look good on the web.  This day and age, an Internet view is the same as a “virtual showing”.  If your home passes the the web-view, you just might be seeing an appointment to get inside the home to see it in person.  You might consider the “in person” viewing as your SECOND showing!  Today’s online buyers expect good quality photo’s and plenty of them.  You can’t get top quality with a cell phone camera either!

4) Your property can’t sell if it’s unavailable to show!  I know this is personal, but it is “real world.” You have a baby and it needs a nap at 2pm. You told your real estate agent that you won’t

You can't sell the house if you can't show it!

accept any showings between 1:30 and 3:30; and no showings on Sundays either because it is your family day.  After all, you reason, “we live here!”  Guess what, if they don’t see it, they don’t buy it.  Every realtor know that when I buyer wants to look, they are thinking about their own schedule, not yours.  That’s why many Realtors are frustrated when they lose a buyer when they aren’t avable when the buyer wants to look.  If your home isn’t available when the buyers are going looking, they just may move on to the next property on the list. 

5) Your property won’t sell because you are invisible.  Buyers today’s start shopping on the Internet.  You need to listed on multiple sites where buyers are looking; that means Trulia, Zillow, Craigs List, Google Base and Realtor.com, to mention a few.  If your agent isn’t getting your house listed in multiple sites, you are probably missing important exposure.

6) Your property listing is tired and stale on the market.  Here’s an example; you overpriced your home last year.  You said “Our house is better for this reason and we only need to find ONE buyer that can see that.”  You reduced your price a few times when you either weren’t getting regular showings, or the buyers feedback was that you were overpriced.  Unfortunately, you “followed” the market down, as buyers cherry picked the houses that were priced the best. 

Remember those showings you had 6 months ago?  You’ll never get them back when you reduce your price later on.  The reason?  In the buyers mind, they remember there was something about your house they didn’t like and you can’t get them back to look.  You know what it was?  It was the price.  Take your house off the market for a month or two so your home enters the market as a new listing.

7) Your property won’t sell because your house won’t appraise.  You got an offer, but the appraisal came in $15,000 low.  There isn’t a chance you can win contesting that appraisal.  Your buyer is already concerned this might not be a good time to buy.  What are your options?  Figure out a way to make it work.  If you don’t, you may find yourself with no buyer and be back to this place again the next time you find a buyer.

When a buyer want to look for a new home, the agent asks a lot of questions before they begin the house search.  “What area’s would you like to live?”  ”What price should we stay under?“  “What’s the minimum of bedrooms you can live with, etc?“ Of course, getting “pre-qualified” with a lender is standard fare before getting the car to go home shopping.

The job of the buyers agent is to get them in everything the buyer wants to see, and keep asking questions as you learn what the buyer seems to prefer; “Would a townhouse work?  How about a duplex for the rental income, etc.”  By the time the buyer makes an offer, they’ve been exposed to the market for homes in the parameters they said they want to look at. 

This is a difficult conversation to have

I am not talking about the sad things, usually unforeseen things, that can happen while you are in a transaction.  If you would have seen this coming you wouldn’t have put so much time into looking for a home.  These things are unexpectedly losing your job, getting your hours at work cut, given notice of a job transfer, etc.  The written purchase and sale agreement covers those things.  For the most part, the lender needs to verify the buyers job is stable, his income sufficient and, according to the lender, his likelihood for future employment is good. 

If any of those things cannot be verified, the buyer can’t qualify for the loan, and he’ll get his earnest money back.  Unfortunately, there are times when this occurs late in the transaction and the seller has spent lost marketing time, possibly other offers and can even have spent money anticipating the sale.  This is unfortunate, but if the buyers offer is contingent upon a getting a loan, and something changes so he cannot (through no fault of his own), he is entitled to get his earnest money back.

And I’m not talking about a home inspection that finds structural defects or other problems.  I’m not talking about sellers that refuse to fix home deficiencies.  If buyer and seller aren’t in agreement, the transaction fails and the buyer is generally due to get his purchase deposit back.

No, the transactions I’m writing about are the times when the buyer just changes his mind for some reason and

Here's the earnest money - thanks for all your work! Sorry it didn't work out

doesn’t want to to buy.  Wait, you say! “Isn’t earnest money put up for just that reason?“  My understanding of earnest money is that as long as the buyer and seller are in agreement, the house passes all the inspections and the buyer is finance-able, earnest is given so the buyer has “skin in the game” and doesn’t just change his mind on this transaction.

Sadly though, everyone sees things from their own perspective, and will find justification for their actions. No one likes to lose money-even wealthy people.  When buyers decide they are not going to buy the property, they rarely say “Hey, that’s what earnest money is for!  We’ll just forfeit our earnest money to the seller.”  No, normally they try to find some flaw in the agreement to justify why they should get their money back.  Usually, if it’s early in the transaction the reason become some document they haven’t received yet, say a disclosure of any common ownership, a pest inspection, a survey, etc.  I’m not saying anything is wrong with that document, but the buyer decides to refuse to accept the document as a reason to fail in the transaction and get his earnest money back.

It's just not "meant to be"

Another sad fact, is that even though the buyers agent knows the stated reason is bogus and just an excuse, part of his responsibility is to represent the buyer and assist him.  At this point, the licensee is not getting paid for any of the time he’s been showing homes, writing offers and attending inspections.  There is no hourly fee due the brokerage to assist the “ex-buyer” get his earnest money back. 

Unfortunately, if the real estate agent and the brokerage takes the stance the seller should lose their earnest money and forfeit it to the seller, they most generally will lose the buyers future business.  The earnest money goes to the seller as “liquidated damages”and the brokerage and licensee receive nothing.

It is a sad dance at this juncture.  The listing and seller agents come away from the experiance thinking they should have written tighter contracts, or gotten their hands on pertinent documents sooner or other similar thoughts.  The truth is there generally isn’t anything you could have done.  If the parties to the agreement decide not to go forward, there is a lot of finger pointing, but really nothing you could have done to change the events. 

When the buyer and their agent finally find the property and the buyer says “I want to make an offer,” the agent doesn’t generally write an offer with”weasel clauses” or loopholes in the contract so they can back of of the deal.  The mission at that point is to buy the property.  

Same thing with the listing agent, the licensee representing the seller.  They generally will strike obvious loopholes in contracts submitted by the buyer and his agent.  If a clause is too ambiguous, they are generally struck early in the negotiation to firm up the contract and make sure all parties are committed to the sale.

City of Anchorage with the Chugach Range backdrop

Obviously, if a person doesn’t have the down payment or have a workable credit score, they won’t be able to seize this opportunity.  If a person is concerned about losing their job, that would be a valid reason for not buying now.  If you are planning on relocating in the next year or two, maybe now isn’t the time to buy.

On the other hand, if a person doesn’t own a home, has good credit and job stability, they should seriously consider capitalizing on this unique combination of opportunities. 

The Top 10 Reason’s to Buy  A Home NOW!

1. Interest Rates are incredibly low – rates are at near historic lows, often spiking below 5%.  Interest rates play a huge part in the cost of hosing together with the price and shouldn’t be overlooked.

The average interest rates for the past four decades were:  1970′s 8.9%; 1980′s 12.7%; 1990′s 8.1$; 2000′s 6.3%

2. Lower prices. Recent price adjustments have made good values that haven’t been available in some situations for years.

3. Selection is still good.  Home inventories in most real estate markets and in certain price ranges are higher which allow buyers better choices.

4. Negotiate financing concessions – FHA, VA and Conventional loans allow for the seller to pay some closing costs that traditionally would be a buyer cost.  This market may allow a buyer to get closing cost assistance.

5. Costs for FHA loan going up.  The annual MIP for FHA loans will probably be going up this year which will incrase the montly payment.  Buyers who get in now will pay lower fees.

6. Interest and property tax deductions- The U.S. is one of the few countries in the world that allow an interest and property tax deduction for homeowners and taxpayers.

7. Capital Gain exclusion- the U.S. allows qualifed homeowners to make a profit on their home without having to pay tax on the gain.

9. Borrowing against your equity is  non-taxable event. taking money out of the equity in your home does not require you to recognize capital gains income.

10. The combination of reasons to buy a home may never be stronger than right now!

Interest rates are going up;  it’s just a matter of when.  Inventories are starting to be absorbed by current demand.  Prices have begun to climb in many U.S. markets.  Real estate inventories are beginning to decline.

A basic rule of investing is to buy low and sell high.  There will be some buyers who take advantage of he current opportunities and will look back and remark how fortunate they were to act when they did.  Th3ere will be others who look back on these conditions and say “We should have bought then.”

Hindsight is always 20/20.  Evaluating the present and acting takes equally clear vision.

A prototype of a real estate sign of the future!

Greg, my friend, said “wouldn’t it be cool to get a monitor on the curb so interested people could see a photo slide-show and even possibly virtual tours?”  I said, “yeah, that would be slick!” 

Greg brainstormed it a bit and came back to me with some drawings and a concept.  I agreed to fund the construction of a prototype. 

Greg built the sign in the photo and I have the sign planted at my listing on 4100 Caravelle Drive.  Not only is sign very attractive on the front of the house, it also has more benefits!

Look up at the top, see the angle piece?  It is a solar panel.  It charges a battery located in the base of the sign.  See the monitor?  Currently it is a slide-show of photographs from the backside of the home and interesting features inside the home. 

Right now Greg is monitoring the battery life to see if the solar panel produces enough energy to keep the battery charged, which keeps the 10 x 10 monitor working. 

Future plans include virtual tours on the screen.  The technology exists to link the sign to a lender or even to the realtor.  Stay tuned for future updates on the “high tech” real estate for sale sign!

There is little doubt the tax credit program helped

With the Federal home buyer tax credit behind us, real estate agents are asking, “What will happen now?”.  “Will the number of sales slow down?” and “Did we “borrow” tomorrow’s buyers in the first quarter of 2010 as buyers hustled to buy a home by April 30?” 

 Personally I have yet to run across a home buyer that bought solely because of the tax credit, but it certainly helped to get first time home-buyers off the fence and out looking.

 Most real estate professionals believe those who bought were going to buy anyway, although you can’t argue with the statistic that 44% of all homes sold nationally in the first quarter of 2010 involved the tax credit.

Also nationally, housing starts (new construction building permits) increased to the highest rate of increase in 16 months. The level of existing home sales rose 6.8% in March! 

Note there are special provisions for members of the U.S. armed services, as well as intelligence service and Foreign Service personnel, including an extended deadline to take advantage of the credit. Those who are on qualified extended duty and out of the U.S. for a 90 day period during any part of 2009, have an additional year of eligibility. In order to qualify for the tax credit, qualifying armed service personnel must sign a contract by April 30, 2011 and have until June 30, 2011 to close on that contract.

I received an interesting comment from one of our house buyers this weekend. This buyer has been steadily trying to buy a home for months. They tried to remain un-emotional (not fall in love with only one house) on each property and focused on “getting a good deal.” 

Can you "price to sell" even in Anchorage buyers market?

This buyer always offered less than the listed price and asked to get some of their closing costs paid on each offer. They made five offers over five months on homes they thought they could live with. They did get one offer accepted and then later the offer failed when a repair item couldn’t get negotiated successfully.

Finally, after five months, they decided to make an offer that would get accepted, just so they get their life settled.

The comment the buyer made at the end of the home buying adventure was “What we found, is that this isn’t a buyers market!”

What is amazing to me, is that from meeting with sellers often, I keep hearing things like “I’m not going to give my house away“, or “I want to sell, but I don’t have to sell.” These statements indicate that the sellers believe the market is low and that if I’m correct in my pricing, the market is too low.

This is contrary to the buyers comment that we aren’t in a “buyers market”. Interesting. It’s the old debate about whether the market is half full or half empty! Isn’t perspective an interesting thing?

From the perspective of a real estate professional, it is important to point out that any property can be priced well and will sell for full price, if the seller really priced the home to sell. 

A real estate market changes at various price points.  In Anchorage, AK a million dollar home might be a great buy, but at that price point, only 2 or 3 sell each month so it make take months to be seen by the right buyer.  At the $250,000 price level, there are many more buyers and sales every day.

Check it out and get a laugh!

Step 1:  Decide to Buy!   Above all else, when done right, home ownership can help lay the foundation for a life of financial security. If you are renting and have a stable job with some savings, and a credit score in the upper 600 range, you can likely qualify for a FHA or conventional financing. 

An interesting tree root washed up in Cook Inlet

Very few people can afford to buy their dream home when they buy their first home.  In fact, according to the National Association of Realtors, 69 percent of first-time home buyers compromised on some features of their first home.  So you make some compromises, buy your first home, and start building equity.  This approach takes you further and faster down the road to bring able to own your dream home than if you hadn’t purchased a home at all.

Step 2:  Hire Your Agent.  Your agent will educate you about the market, analyze your wants and needs, guide you to homes that fit your criteria, coordinate any needed professionals, negotiate in your behalf, and all the while check and double-check your paperwork and solve any problems that may arise.

Step 3:  Secure Financing.  Your lender will approve you for a loan amount, but ultimately, YOU will decide what you are comfortable paying every month.  In other words, you don’t have to get a loan as high as you qualify for…you are the boss.  When you pre-qualify for a loan, both you and your agent know you aren’t just wasting time; if you find the right property, you can move forward on it.

Step 4: Find Your Home!  Your real estate agent will help you sort this out.  Which is more critical, size or location?  Are you interested in a condo?  A duplex?  Do you need a yard?  You’d like a 3 bedroom, but will two bedrooms work if everything else is good?

Step 5:  Make an Offer.  This is done in writing on a proper “purchase money agreement”.  Your agent will help you decide what a fair offer is.  An offer includes several important things such as the price you are offering, when you want to close, a home inspection, who pays what closing costs as well as what things go with the sale like refrigerator or window blinds.

Step 6: Due Diligence. Very few homes are absolutely perfect.  This is where you hire a professional to inspect your home, hopefully with you in attendance.  The inspectors job is to check for code compliance and for construction problems – large and small. 

Step 7:  Closing on your home.  You’ll need to get home owners insurance and put utilities in your name.  Your real estate agent will check your work schedule and look for available appointments with the loan closer.  In our market, you sign one day and “record’ the transaction the next day which is the official day you own.

Step 8:  Protect Your Investment  Learn to give your new home the love and care it needs.  you will need to learn to perform routine maintenance on your home’s system, depending on it’s age and condition.  A good rule of thumb is to watch for signs of leaks, damage and wear.