Update: The Hidden Property Tax, Your Clients, and You

There’s no denying it. Property tax bills are getting larger. As home values rise, the number of dollars coming out of our pockets rises, too. That financial pressure is making home ownership less attractive for some. It’s making it unattainable for others. And it’s beginning to push people to the point of no longer being able to afford their homes.

And we can do something about it. Remember, we are taxpayers. We are voters. We are Realtors. We have a voice. And we have the ability to create change.

Through our public advocacy outreach, we have encouraged local leaders to adopt the effective tax rate which would keep tax bills where they are, instead of allowing them to increase exponentially. MetroTex president Russell Berry has twice testified at Dallas County Commissioners Court hearings on the matter. We also launched an Issues Mobilization campaign to ask the public to contact their commissioners. We’ve written Op/Ed pieces and blogs, we’ve sent out postcards and maintained a strong social media campaign. And we’ve gotten a lot of coverage in the local media about the issue. We have changed the conversation and seen positive results.

Collin and Tarrant Counties are considering just such a move. Denton County has already adopted the effective tax rate for 2016. Some area school districts are joining in the effort by doing the same. Unfortunately, despite our efforts and the support of Judge Clay Jenkins and Commissioner Mike Cantrell, Dallas County voted not to adopt the effective tax rate for 2016, further increasing the tax burden on its citizens.

The Texas State Legislature is taking note. It is very likely that Texas legislators will consider the rising property tax burden on Texans. MetroTex will be there, alongside TAR, and other local REALTOR associations, fighting for homeowners.

You can get involved, too. Here’s how:

  • Contribute your fair share.* When annual dues bills come out in the next week or so, contribute to TREPAC to support this and other important causes that directly impact your business.
  • Visit thehiddenpropertytax.com and encourage your clients, friends and family to watch the video. We want voters to know more about how they are impacted by the hidden property tax, and what they can do about it.
  • Post the links on your social media. Help us raise awareness.
  • Contact your state senator and your state representative. Tell them you want them to stop the increasing tax burden on home owners. Visit http://www.fyi.legis.state.tx.us/Home.aspx to find out who represents you and how to contact them.
  • Make sure you and your clients are registered to vote: http://www.votetexas.gov/.

Help us protect the interests of homeowners across the state. We know we can make a difference. We already have. But our work is not finished.

* Disclaimer:  Information disseminated in the public domain about TREPAC might be considered a solicitation, therefore contributions received from persons that are not members of the Texas Association of REALTORS(s) through this posting will be returned. 

3 easy ways to make your client’s home more appealing to buyers

Help your clients get the most out of their investment with these simple tips for sellers.

Yes, paint it

They’ve probably heard this tip, but it’s worth stressing: Painting a home is one of the easiest ways to improve the impression your client’s home makes on buyers. They can save money by doing it themselves or save time and pay someone else. If you have good references, they will appreciate it. Bring them some popular color samples to help them decide. Ask at your local paint store for popular choices.

They may only need to paint a room or two, and keep in mind that freshening up the trim and doors might be all they really need

Go for the minor remodel

A major kitchen or bathroom remodel can cost tens of thousands of dollars. While buyers will appreciate the results, your sellers may not recoup the cost of the work when they sell. However, they can make smaller changes—most of which are easy to DIY—to bring an updated look that will appeal to buyers.

You can suggest they consider replacing faucets, light fixtures, and cabinet and drawer pulls, especially if they are worn, dated or just not very attractive. In bathrooms, they’ll get a lot of bang for the buck with fresh towel holders, a new shower head, and light-switch and outlet covers. And be sure to offer advice on dated wallpaper or paint colors.

Spend some time outside

We all know well how important first impressions are and the curb appeal of a house is vital. Remember to take marketing pictures after the front yard has been refreshed with new mulch, flowers, and potted plants. Staging the walk up is as important as keeping the inside tidy. You can also suggest they repaint the numbers on the curb or replace a dented or rusted mailbox.

Out back, more potted plants or flowers can add a pop of color even in small spaces. Suggest your sellers trim back overgrown trees and shrubs - especially if they’re getting too close to the structure. If there are bare spots, they can add fresh sod or create a flower bed if it makes more sense.

Finally, point out the common flaws inspectors find and suggest they address some of the easier honey-do items that are routinely mentioned - in other words, introduce them to the wonders of a caulk gun, freshly painted chimney stacks, and clean gutters.

By helping your sellers tighten up the look of their property, you will all enjoy the benefits of a more appealing and marketable property.

Why you should tell your clients not to assume the highest offer for their house is the best one

There are many factors involved when considering competing offers with your clients. Here’s a handy guide to help your clients better understand all of the offers on the table. Share it with them and let the referrals roll in!

Consider all of the factors that will determine which offer is right for you.

Where’s this money coming from?

Without cash or a letter from a lender that is providing a mortgage loan, buyers may not be able to afford the price they’re proposing. Ask your MetroTex Realtor to find out if potential buyers are prequalified or preapproved.

How serious are the offers?

Potential buyers will put a certain amount of earnest money toward the sale in advance of the closing to show they’re entering into this transaction in good faith. Your MetroTex Realtor can help you verify if the amount of earnest money is a strong offer, which is a sign of serious buyers. If the transaction closes, the money counts toward the down payment; if it doesn’t close, you may get to keep the earnest money.

When’s moving day?

Determine if the proposed timeline for the transaction matches your schedule. If the buyers want a closing date that’s too soon for you, temporary-housing costs could eat into that higher offer. Of course, if the buyers don’t want the transaction to close for a few months, you could end up paying two mortgages for a while.

They want the TV and the dining room set?

Buyers can put all kinds of things in an offer. They can request an option to terminate, ask for repairs, see if you’ll leave appliances or furniture, and make the offer contingent upon the sale of their current home. Your MetroTex Realtor can help you decide what is reasonable.

Do your buyers know what’s in their credit report?

Many buyers want to look at houses first and worry about their credit later, and many Realtors don’t want to show potential buyers homes unless they’re already working with a lender. You can help explain to your buyers why lenders need all of the information they do and how they use a credit report. Here’s and handy guide to share with them.

You can’t afford not to get your credit report

The Fair and Accurate Credit Transactions (FACT) Act of 2003 made it possible for consumers to access free copies of credit reports (also called credit-file disclosures). The free reports list key aspects of your financial history.

Before you apply for a loan, you should request a free credit report to get an idea of what a lender would see. If the report has errors, you can correct them before they affect your ability to qualify for a mortgage loan. And if you find legitimate flaws, you might be able to take steps to improve your credit standing before purchasing a property. Your Texas Realtor may be able to help you find resources to repair your credit.

How many credit reports can you request?

You can request one free credit report every 12 months from each of the three major consumer credit-reporting agencies: Equifax, Experian and TransUnion. But you don’t have to get all three reports at once. How many you request and when is up to you. If you know you will be applying for a loan soon, you might choose to receive all three at the same time to look for errors or legitimate problems that only appear on one or two of your reports. You can also directly compare all three reports at the same point in time.

Or, you can space out the reports to receive one on a quarterly basis or one each month for three months in a row. Getting the reports periodically can help you monitor changes and is a good way to find out whether you have fallen victim to identity theft.

What’s in the report?

A credit report lists how much you borrow, whether you pay on time, if you’ve been sued or have declared bankruptcy. The disclosure includes some information that a third party would not receive, such as medical-account info.

It’s important to note that a credit report is not the same as a credit score. If you want your credit score, you typically have to purchase that information.

How do I get my reports?

You can request free credit reports online at www.annualcreditreport.com. You’ll be required to provide your date of birth, Social Security number and current and previous addresses so the credit agencies can obtain your information. The site is encrypted to ensure a private and secure connection. During the process, the site may ask you to verify previous addresses or accounts you hold to further verify your identity.

Once your information is verified, your report will appear on the screen and is usually available to download onto your computer. If you find errors, you should work directly with the credit-reporting agencies by submitting written documentation of the mistakes. Their sites are www.equifax.com, www.experian.com and www.transunion.com.

If you do not want to use the Internet to access your reports, you can request them by phone at (877) 322-8228. You can also mail a request to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, Ga., 30348-5281.

Beware of any person or organization that sends you an email offering you a credit report or ads you see claiming to be from www.annualcreditreport.com. The FTC warns that you should not reply or click those ads, as they most likely are scams.

A legitimate report, though, that you request through the Web site, by phone or by mail can help you make sure your credit is in good shape to pursue your dream of buying a home. 

Tips for Buying a Home with Friends

With housing inventory low and prices going up, some people are making the decision to partner with friends and buy a home together. This scenario allows people who otherwise would not be able to afford a house to share expenses and achieve the dream of becoming homeowners. But how do you know if buying property jointly is the right move for your clients?  

It is important to remember that this is a business transaction, so your clients and their friends will have to approach it as such. You are going to have to have a very open, very frank conversation with all parties about their finances, their plans for the future, what to do if someone wants to sell, etc. If these are conversations they are uncomfortable having or they are worried about the effect they might have on their friendships, then buying a home with friends is probably not the right choice for them.

However, if your clients and their friends can come to terms, owning a home while sharing the burden of all the costs can help you build their savings while gaining equity in a home.

Here are some tips on purchasing a home with friends you can share with your clients.

Review your friends’ finances. This is most likely the largest financial decision of their lives, so now is not the time to hem and haw on questions of finance. They will need to be aware of everyone’s credit scores, income, savings and any other relevant assets. It is important to make sure that your clients and their friends are financially prepared to become homeowners.

 

Decide how payments and costs will be split. Questions to consider are how much each person will contribute to the down payment and if that will affect how your clients and their friends divide the mortgage payments? Will the utilities be split evenly every month or will they alternate who pays? It is important that these details be worked out and understood by everyone involved before the home is purchased.

Decide on the type of house. Are they planning on buying a single-family home or a multi-family home? Do they see themselves sharing a kitchen and bathroom, or are they looking to buy a place where they will each have your own private residence. Your clients and their friends should also decide ahead of time on everyone’s must-haves for the home. Knowing that the friends will only buy a house with a big backyard or that they will not buy a house on a corner lot can save you a lot of time house hunting.

Get everything in writing. It is important that all of the co-purchasers keep written documentation of all of the agreements regarding financial and other responsibilities. So many people think that because they are dealing with friends that there is no need to write up a contract, but it can help you to avoid conflicts and surprises down the road.

Work with a Realtor. Buying a home is an important decision, and whether your clients and their friends are doing it on their own or with a friend, using a Realtor® is a smart move. A Realtor can provide counsel, discuss listings, show homes in person, negotiate on your clients’ and their friends’ behalf and help them stay focused on the issues that are most important.

If your clients and their friends enter the arrangement educated and prepared, co-purchasing a home can be a great way to get your clients and their friends on the first rung of the homeownership ladder.

Building Credibility With Foreign Clients

With nearly one in four residents in Dallas County from abroad, chances are pretty good that you’ll work with an expat at some point. There are some unique challenges that foreign buyers face when entering the US market, whether they are moving here or simply buying an investment.

Without a strong US credit history, would-be homebuyers moving into the area face unique challenges when trying to get established. They need to make a cash offer, or they may need to be able to put a large amount (up to 50% down). Before you start working with a foreign buyer, search for an interview local lenders who routinely work with international clients. They’re a great resource to have on hand.

Have other vendors and contractors in your portfolio as well. Whether they’re new in town or not here at all, they’ll greatly appreciate being able to turn to you for reliable referrals.

The process in the U.S. is often pretty different than how real estate is handled in other countries. Be prepared to explain the process down to every step. Clearly outline expectations both verbally and in a follow-up e-mail and be prepared for and open to a lot of questions.

When you’re working with foreign investors, give detailed feedback about their investment portfolios frequently. If you’re also managing their properties, let them know what’s working well and what isn’t. You’ll gain more credibility and repeat business.

Your international clients may not be in town for every showing. If your client is traveling or not able to attend a showing, suggest a virtual walk-through via Facetime, Skype or any number of available apps. Keep in mind time differences when booking appointments.

Finally, it’s a good idea to earn the Certified International Property Specialist designation and to join out Global Business Council here at MetroTex. The designation and the Council will be an invaluable part of building your business. Look for the next meeting and classes on the MetroTex calendar on mymetrotex.com.

A Solution for Rising Property Taxes?

With property tax protest season in full swing, Realtors all over the Metroplex are busy running comps and offering advice to homeowners who are headed into their tax protest hearings. And no wonder. With property values rising quickly, many homeowners are finding themselves paying more and more taxes every year. Unfortunately, salaries are not rising as quickly as tax bills. As Realtors, we need to stay active and advocate property tax reform to protect our clients and the health of the market. That’s why we supported Proposition 1 to increase the homestead exemption and prevent sales tax on homes. As it is, Texans pay some of the highest property taxes in the country; many are being forced out of their homes as values rise.

In Dallas County, Dallas Judge Clay Jenkins and others are considering cutting the property tax rate. That’s a great start. But we’d like to see more. Judge Jenkins’ proposal to lower the property tax rate is not ultimately is not a proposal to lower taxes. Rather, his proposal would equate to a smaller annual tax increase. Lowering the property tax rate still allow the amount of tax that homeowners pay to increase every year as long a property values are on the rise.

Currently, property taxes are calculated by multiplying property values by the tax rate. When value rise, so do your taxes. When property values rise every year, as they have done lately, that means your tax bill gets bigger every year, too.

We’d like to see a more predictable model for homeowners and offer some relief from large tax bills. First, we’d like to see a local homestead exemption by county. This proposal would offer immediate tax relief to homeowners. Additionally, we advocate an effective tax rate. An effective tax rate will fluctuate with the market so that homeowners will have a predictable, stable tax bill regardless of how the market is doing. Local governments will know how much they are going to collect from homeowners, and any additional revenue will only be derived from new and omitted properties. Texas state law requires property taxes to be based on property value, but the law does not require the rate to be set. By using an effective tax rate we can satisfy Texas state law and can offer homeowners a predictable way to plan their budgets.

We’d like your help to advocate for responsible taxing policy. Please visit http://www.thehiddenpropertytax.com/ to learn more about the effective tax rate and how you can help make this happen.

How about that Texas Market?

How long will this booming market last? Are we in a bubble? Is it a good time to buy or sell? These are questions we are all hearing a lot these days. Unfortunately, we haven’t been able to find a working crystal ball anywhere in the Metroplex. However, we do have something better. Hard data from the experts. The folks at the Texas A&M Real Estate Center regularly publish data about the Texas economy. Here are the highlights from their latest report, boiled down to facts you can use when answering questions from the public.

The Texas economy is robust. Employment is the state is strong and growing. More people are re-entering the job market. The biggest gains in employment recently have been in the services sectors, (financial services, education, health services, professional and business services) as well as in trade, leisure, and hospitality. Analyses of the business cycle and current economic activity point to positive trends in the state.

Texas housing sales appear to be accelerating. Demand for housing is strong in most areas, although Houston is lagging somewhat. Across the state, housing sales increased 7.8 percent in April. Austin, Dallas-Fort Worth, and San Antonio all experienced an increase in sales. Houston dropped 0.2 percent as the impact of the energy sector decline plays out in the Houston economy.

Home building activity is brisk. Houston and Dallas-Fort Worth led the nation in the number of single-family permits issued followed by Atlanta, Phoenix, and Austin in April. That said, Dallas-Fort Worth issued fewer permits than its peak rate in December 2015.

Inventory of available housing is low. Dallas-Fort Worth inventory levels were estimated at 2.2 months in both April and May, compared to 3.7 months statewide, and 5.6 months nationwide. Low inventory levels are contributing to rapid price growth in housing.

Incomes are not following pace with the housing price increase. In the Dallas-Fort Worth area, real earning levels have not increased above January 2007 levels.

Foreign Buyers Flock to Warmer Dwellings

It’s not uncommon to hear of friends, family and neighbors packing up and heading to a second home in warmer states during the winter months. After all, many parts of the country experience brutally long bouts of cold and snowy weather. However, U.S. citizens are not the only people looking to spend at least some of their year down south or out west, whatever the reason. According to the National Association of REALTORS® 2015 Profile of International Home Buying Activity, just four states accounted for half of all international home sales: Florida (21 percent), California (16 percent), Texas (8 percent) and Arizona (5 percent).

Our Own Global Business Council has been working hard to ensure MetroTex REALTORS have the deepest understanding of Dallas’ place in the global market and how to work with international buyers and sellers.

International activity in North Texas is growing quickly. Increasingly, we’re seeing activity from China and India in addition to our important relationship with buyers and sellers from Mexico and their neighbors to the south. Interestingly, the most international online property searches for Dallas-Fort Worth are coming from people in Canada, Mexico, the U.K., Germany and Australia. It’s reasonable to expect interest to translate into dollars at some point. International activity is a big reason why cash sales account for approximately 30 percent of all sales in the region.

Rapid population growth, lots of industry moving into the area and an increasing number of long haul non-stop international flights make the region more attractive to a globally-minded crowd. As a REALTOR®, your ability to take advantage of the global market are dependent on your expertise and knowledge. Becoming a Certified International Property Specialist and a member of the MetroTex Global Business Council should be are essential part of your business plan. Find out more by joining us at the next Global Business Council meeting on July 20 at MetroTex Dallas. Contact stevet@dfwre.com for more information.

Millennial Attitudes to Homebuying Varies by Region

Will Millennials ever decide to buy a home? The common perception is that they’re just not interested. However, new research indicates that attitudes toward home buying vary more by region than by generation.

Selfie or searching MLS?

According to a recent survey by the National Association of REALTORS, millennials both see the financial value in homeownership and want to own someday. And here in Texas, that attitude is especially prominent. In NAR’s quarterly survey, millennials in the South are most likely to believe homeownership is a part of their American dream (at 91 percent), followed by those in the West (at 90 percent). Millennials in the Northeast and the Midwest followed closely behind at 88 percent and 84 percent, respectively. As for homeownership being a good financial decision, the numbers were a little more even across regions—86 percent of millennials in the West agreed with that statement as did 85 percent in the South and 84 percent in both the Northeast and Midwest.

Part of that may have to do with age. The oldest Millennials are now 34, have largely completed their education and are likely several years or more into their careers. It would make sense that they are now more inclined to settle down, buy a house and build equity. Here in Texas, 66 percent of them feel like now is a good time to buy. While that figure is significantly less than the 77 percent of Gen Xers who feel like it’s a good time to buy, it’s still a sign of shifting attitudes among younger professionals. And if you have a look around at all of the construction cranes, you’ll see that Millennials are very interested in buying both in urban and suburban areas, and are largely leaving rural areas behind.

If you’re looking to expand your pipeline to reach first time buyers, make sure you know how to communicate with Millennials effectively. Take some classes here at MetroTex to modernize your toolbox. For example, the DISC personality profile class will teach you how to read personalities and adapt your communication style to work better with them. Our technology classes will show you both how to become more efficient in your work and how to reach Millennials where they already are. Check out our course calendar at mymetrotex.com and register today.

Student Loan Debt Causes Homeownership Ripple Effect

For some time, housing industry experts have been discussing the impact of student loans on the ability of many to purchase a home, especially since the number of first-time homebuyers in recent years has dropped and remained lower than usual. In Texas, nearly two-thirds of graduates emerge from college with debt. That’s a lot of potential homeowners waiting longer to buy homes. 

Thanks to a paper by Federal Reserve Board economists, the industry now has a better idea of just how much homeownership is impacted by student loan debt. According to authors Drs. Daniel Ringo and Alvaro Mezza, a 10 percent increase in student loan debt cuts the homeownership rate by 1-2 percentage points 24 months out of school. Additionally, that 10 percent increase in student loan debt increases the probability that a borrower falls into the subprime category (a credit score of 620 or less).

In Texas, students graduating with a bachelor’s degree leave school with an average debt of $26,250. That’s lower than the national average of $37,172 but more than $10,000 higher than it was a decade ago. 

College grads shouldn’t let the news get them down, though. With proper credit management and a bit of financial planning, grads can still find a way to buy a home sooner rather than later. It still makes sense to buy in many cases, too. After all, mortgage rates remain historically low and the cost of rent is rising quickly. If you’re thinking of buying a home in the next few years, it makes sense to speak with a credit counselor and a local lender who can advise you on the best ways to protect and build your credit rating, how much to save for closing costs and down payments, and incentive programs available to first time homebuyers. Do this long before you plan to buy and you’ll have a better idea of what to expect when you’re ready.

For more information about buying or selling a home, visit dfwrealestate.com or speak to a MetroTex Realtor.