Dallas Real Estate and Short Sale Blog: December 2010

As a property owner, you are required to pay property taxes. It is taxed each year by a variety of jurisdictions including the county, city and school district.



If you purchased in 2010, you may need to notify the taxing authorities of your ownership so that the tax rolls will reflect the change. You may do this by contacting the appropriate tax appraisal district in your county from the following list:

Collin County Appraisal District - 469-742-9200 - www.collincad.org
Dallas County Appraisal District - 214-631-0910 - www.dallascad.org
Denton County Appraisal District - 940-349-3800 - www.dentoncad.com
Ellis County Appraisal District - 972-937-3552 - www.elliscad.org
Rockwall County Appraisal District - 972-771-2034 - www.rockwallcad.com
Tarrant County Appraisal District - 817-284-0024 - www.tad.org

Your property is assigned a single appraised value, which is sent to all taxing jurisdictions. The jurisdiction then applies the tax rate, as set by its governing body, to the appraised value.

2011 TAX EXEMPTIONS

On January 1, 2011, value, ownership, legal description of the property and exemption status of the taxpayer is determined. Several forms of tax relief are available which may reduce the taxable value of your property. Applying for exemptions is the taxpayer’s responsibility. Some exemptions require a new application each year. Contact your appraisal district to learn more about the following exemptions and how to file for them:

General Homestead Exemption
Over 65 Exemption
Disabled Individual Exemption
Disabled Veteran Exemption
Agriculture Land Exemption

To receive your exemption(s), you must own the property and be living in the property as of January 1st. Your application must be applied for on or before April 30, 2011 to receive the tax benefits for this year. This is a FREE service.

Remember, tax statements are generally mailed in October of each year. The taxes are payable on or after October 31, however, you may elect to pay them as late as January 31 without penalty. Taxes become delinquent February 1 and on this date penalties and interest do accrue. If you receive a Tax Statement and your mortgage company is escrowing funds for taxes from your monthly payments, forward the statement to your mortgage company so they can pay the taxes.



ActiveRain Challenge: Never Answer the Same Question Twice | Basic information provided by Republic Title | Photo licensed from iStockPhoto

Dave Liniger, Chairman and Cofounder of RE/MAX International recently published an article titled, “Selling It Short” in DS Magazine. The article is a report card on Short Sales in general and where he thinks we’re headed in 2011.



Dave focuses on three major areas; avoidable problems, untrained agents, and good ideas.

“...it’s time for avoidable problems such as lost files, conflicting responses, and inadequate communication to be minimized or eliminated altogether,” he wrote. While we don’t see much of this these days, the delays as the file gets bounced from negotiator to negotiator can be very frustrating for the agents, seller, and the buyer.

In our book titled, Avoiding Foreclosure – The Field Guide to Short Sales, we wrote, “If you are in the position to buy or sell a house through a Short Sale, ONLY work with a real estate agent who is well-versed in the Short Sale negotiation process.” Dave had the same thoughts when he wrote. “Unprepared agents who enter this arena - where even the simplest sale is still a complex, multilayered transaction - do a disservice to consumers and the industry as a whole.”

The real jewel in Dave’s article was his thoughts on “Good Ideas”. He wrote, “The best idea might be the frontloading of lender decisions regarding acceptable terms. A listing agent who knows that the required net proceeds have already been determined can take the leap and proceed with good faith and confidence that a reasonable offer will be considered seriously. Using this as a starting point, rather than the submission of an offer, gives the agent a valuable edge in marketing the property as well as managing the expectations of the servicer, the seller, and the potential buyers. It’s a better way to go.”

As a major Short Sale listing broker, I have to agree that this would be a great idea. We already do it with FHA Short Sales. The only issues we run into here are poorly completed BPOs or appraisals where the value is so out of line with what the market that it makes selling the property impossible. Lenders should have processes in-place that will allow us to challenge the values rather than leaving us stuck with that value for 120 days.

We encourage homeowners across the United States to get educated on the options available should they become financially distressed. Short Sales are a great tool, providing relief to all parties. Just remember to choose a REALTOR® with a proven Short Sale track record to negotiate on your behalf. Making the right choice can mean the world of difference to your financial future.



Photo licensed from iStockPhoto

Yesterday I was reading Robert Freedman's article in REALTOR® magazine titled, "Know Who's Using Your Data." Robert's main point was that many practitioners do not read the fine print in the agreements they sign with vendors who gain access to our MLS data.

Yes, our data. The MLS is a private database governed by rules created by the MLS and approved by the National Association of REALTORS®.

Too many practitioners do not take care of our data. Go to Zillow and you'll find thousands of listings that have expired, been sold, or otherwise removed from the market. It's easy to blame it on Zillow, but it's not their responsibility to keep the data current. It's our responsibility. 

I get at least one phone call a week on a "listing" on Zillow only to find that the listing is not active. Some of this is caused by unethical agents posting all kinds of things in their hunt for clients. I've called more than one broker to let her know about the issue.  Often times I find the data is being syndicated by Virtual Tour providers, Postlets, or one of the hundreds of sites who pool and use our data.   

If you're one of the unethical agents doing "bandit" postings, stop doing it. If you're a listing agent, be sure to know who syndicates your data as often they have no way of knowing the status of a listing.

Personally, I only allow Point2Agent to syndicate my listings. While my virtual tour provider, IDX provider, and eflyer provider can also syndicate my listings, I don't allow them to do so.  Point2Agent follows the MLS status and will not only update listings, but also their syndication partners as well.

The bottom line is each of us is responsible for keeping our data updated and current. Not only is it a requirement of the Code of Ethics, it's just good business as well.

Photo licensed from iStockPhoto

I recently took part in an NBC 5 News story by Grant Stinchfield. The story titled, "Super Bowl Rentals Could Become Brothels, Group Says" focuses on the possibility that leased homes could be used for illegal activity.



With the Superbowl coming to town in 2011 and the hint of big money, some homeowners close to the stadium (and those not so close) are considering leasing their homes for the event. Grant raises a great point that anyone considering leasing their homes needs to exercise caution.

While this is true in any lease situation, these short-term leases represent a huge risk to the owner. If you are looking into a short-term lease consider the following:

Take a Lease Application. Most of us would never lease our home without one so why do it now?

Run a Background Check. Part of the lease application should be an authorization to do a background check including criminal and credit.

Put the Lease in Writing. While Texas Law recognizes a verbal lease for less than one year, it's critical to get the details in writing. Contact a local real estate professional or an attorney to have the document drafted. You have to plan for holding-over or damage to the property. If you don't, you may find yourself having to go through the eviction process and find damage that exceeds any profit made on the lease.

Remember the Golden Rule of Business. If it sounds to good to be true, it usually is.

The Superbowl will have a huge economic impact on the DFW Metroplex. If you decide to lease your home to cash-in on that impact, take steps to protect yourself and your property.



Source: http://www.thebranchteam.com/wordpress/2010/12/26/dallas-superbowl-leasing-in-the-media/

Photo Licensed from iStockPhoto

December 23^rd was the frustrating end to a five-month attempt to complete a short sale. We listed the property in July and executed a contract in early August. While we worked the package with both lenders, our first buyer walked. We quickly found a new buyer who was more than willing to wait for us to get this done.



There were two liens with two different banks. The second was fine with $3000. The first (who will remain nameless) was willing to work with us but bounced our file from negotiator to negotiator. Of course, we continued to provide updated documents and various affidavits. We also had to release the home form the bankruptcy so we could move forward. While slow, we were making progress.

In the final week, things took a turn for the worse. The negotiator took the last two pay statements we provided and came up with a monthly income that was $1000 over what we had submitted. One of those two pay statements showed $800 in overtime pay. The seller is a police officer and had moonlighted at some local football games to make a few extra dollars.

The bank averaged the two pay statements and added the extra income from the football games to arrive at a net monthly pay. I discussed the issue with the negotiator and her supervisor. They declined to reopen the file and it will be sold at a Trustee Sale on January 4^th.

Let’s look at their logic.

The December pay statement with the overtime pay showed YTD gross overtime of $2200. Clearly overtime was very rare. An originating lender would have not allowed it to qualify for a mortgage so why should we use it to undo a mortgage? I argued that $2200 gross was about $1750 take home and if they felt the need to include it, they should divide it by 12 and add the result to the monthly figure. This would have added $145 to his monthly take home.

The football pay is $195 gross for 10 games or $1950. After taxes, the take-home is about $1500 or $125 a month.

Neither overtime nor the football pay may exist in the future and we would have ignored it on the origination side unless we had a letter from the employer stating that the pay would continue.

I’m normally very supportive of the banks, but in this case they have applied a dual standard to accounting for income. If they had followed the origination standard they would not have allowed any of the income. Even if they used the annual figures (converted to monthly), the seller would have been negative cash flowing and they would have approved the Short Sale.

Lose, lose, lose, lose. The seller has a foreclosure on his credit report, the bank has to foreclose and incur the costs to sell the property (likely for less than the Short Sale offer), the investor takes a greater loss, and the current buyer has wasted 3 months waiting on this to be approved.

This is the kind of thing that winds up in a lawsuit...

 

Source: http://www.thebranchteam.com/wordpress/2010/12/25/calculating-income-for-a-short-sale-is-there-a-dual-standard/

Photo licensed from iStockPhoto

3 Bedrooms | 2.1 Baths | 2-Car Garage | 1961 SF/Tax

Plano TX Townhomes For Lease - Beautiful new construction with stone exterior. Gourmet kitchen with breakfast bar, upgraded cabinets, granite, stainless appliances, and gas cook top. Study with French doors. 8 ft Knotty Alder front door with wrought iron speakeasy. Many designer touches. Enclosed private patio with gas for BBQ. Full service HOA for low maintenance living. Never lived in!

Current status, pricing, photos, and a virtual tour for this Plano TX Townhome for Lease.

Source: http://www.thebranchteam.com/wordpress/2010/12/19/plano-tx-townhomes-for-lease-8619-naomi/

It's been fun to watch urban living migrate to the suburbs. Over the past five years, we've seen a number of developments pop-up that offer urban-style living in suburban cities surrounding Dallas.



Watters Creek, located in the southwest corner of US 75 and Bethany Road, is one of the latest urban-style developments in Collin County.

The Watters Creek website reads:

With its vertically dense design, this 52-acre project incorporates a complete mix of uses including a large creekside village green, interactive public art, a variety of retail options, restaurants featuring al fresco dining and water views, and office space and residential lofts.

Gina and I really like the area with its upscale eateries, wine bars, upper-end retail, and Market Street. We stopped into Grimaldi's Pizzeria the other evening for a couple of Blue Moon's and a pizza after spending an afternoon listing a property in Allen. Other good places to eat include The Cheesecake Factory, P F Changs, and The Village Burger Bar.

Currently the area is decorated for the Holidays with extensive lighting and seasonal activities.

 

Source: http://www.thebranchteam.com/wordpress/2010/12/19/watters-creek-in-allen-texas/

Rob Minton recently published the results of a survey he conducted in an article titled, “Survey Results: Average Agent is Headed for Poverty in Retirement.” While Rob focused on many facets of financial planning, I took note of the results of question number 5 on his survey where he asked agents if the have an emergency fund.



The results of that question were:

33% I don’t have an emergency fund
10% Emergency fund to cover 1 month of living expenses
20% Emergency fund to cover 3 months of living expenses
37% Emergency fund to cover 6 months of living expenses

Given the state of the economy, I actually thought the results of this question were better than I expected. Many of the agents I speak to are pulling money from their emergency fund in order to stay in business. It’s not just the new agents, but many of the top producers are feeling the strain of the economy.

I spend quite a bit of time with other small business owners and the general consensus is that many of them are “treading water” just trying to keep their businesses profitable.

I noted that the National Association of REALTORs® is projecting a steady rise in real estate sales over the next few years, but the recovery is going to be slow.

How’s your emergency fund holding up?

Source: http://www.thebranchteam.com/wordpress/2010/12/19/how-is-your-emergency-fund-holding-up/

As usual, I found myself in a lively discussion this morning. Having published, The Field Guide to Short Sales, I get asked some really tough questions from time-to-time.



Here’s the situation:

A tenant signed a one-year lease using the Texas Association of REALTORS® residential lease. They took possession of the property and have been paying the rent on-time for the last 13 months. The lease was not renewed and is continuing on a month-to-month basis. About a month ago, they started to receive notices in the mail addressed to the landlord from the mortgage company.

Being concerned, they confronted the landlord. He told them he was going to list the property “for sale” with a local broker and that the tenants could stay while he marketed the property. When he secured a buyer, he would give them the 30 days notice required under the lease.

The tenants eventually figured out that the landlord was in default on his mortgage and was trying to Short Sell the property. At that point they quit paying the rent. When confronted, they commented, “If the landlord is not paying the mortgage company, we’re not paying the rent.”

My thoughts:

My initial reaction was that the payment of the mortgage by the landlord and the payment of the rent by the tenant are two separate issues. I reviewed both the Texas Property Code and the Texas Association of REALTORS® residential lease form. There’s nothing that ties the two issues together.

The tenant defaulted on the lease by not paying the rent and is liable for late fees, court costs, and other relief available in the lease.

The landlord has not defaulted on the lease because the property is still available for the tenant’s use.

Epilogue:

This is a growing problem as foreclosures continue to climb.

If you are a tenant in this situation, you should seek legal advice before you simply stop paying the rent. State Laws vary and each lease may contain different clauses.

If you are a landlord, you should seek legal advice as well. If the property goes into foreclosure during the lease, you may be in default and liable.



Photo Licensed from iStockPhoto | Source: http://www.thebranchteam.com/wordpress/2010/12/15/the-landlord-stopped-paying-the-mortgage/

3 Bedrooms | 2 Baths | 1-Car Garage | 1869 SF/Tax

Irving TX Homes For Sale - Great potential in this 3-2-1 with carport, two living areas and huge kitchen with great storage. Additional living area could be used as gameroom or formal dining. View this property in an established neighborhood and see how you can make it 'your own'.

Current pricing, photos, and a virtual tour for this Irving TX Home for Sale.

Source: NTREIS | Photo Copyright 2010 - Imaged2Sell

Originally posted at http://www.thebranchteam.com/wordpress/2010/12/12/irving-tx-homes-for-sale-2404-william-brewster/