Tax Assessment/Appraisal: How Do I Know What My Home is Worth?

Writen by Elaine VonCannon

If you are in the home buying or selling market, it’s important to understand the difference between tax assessment and appraisal value. Concentrate on the appraisal value because this determines your asking price.

Understanding Tax Assessment

The tax assessment is a tool local governments use to exact a property tax rate on residents. The local government determines your home’s worth by reassessing the homes in the area you live in periodically. Some areas reassess every 2 3 years. But with today’s booming real estate market, the National Association of Realtors estimates 60 70% of U.S. tax assessments do not reflect the escalating market value on home sales. This is why the tax assessment is not always an accurate gauge of true home worth.

Tax assessment offers a general idea of home value. If you are curious about whether your tax assessment office is keeping up with the local market, telephone your local real estate board and local tax assessment office. Ask them about the local appreciation value on homes to determine if they are up to date.

Focus on the Appraisal Value

Home sellers should concentrate on the appraisal value, because a mortgage lender will write a loan on the home for this amount. Location is the prime factor in appraising a property. An appraiser will look at three homes that sold during the previous three month period to determine what similar properties have sold for in the same neighborhood. If your home is in a rural area, or if the sales in your area have been sluggish, the appraiser can go within a five mile radius to locate similar homes for comparison. If there is home value inflation in the area, the appraiser will factor this in. A good appraiser will contact the realtor who sold the homes he or she is using as a comparison.

What Do Appraisers Look For?

An important rule of thumb of real estate is: location, location, location. Appraisers are mainly focused on the following to determine home worth:

• square footage

• condition and age of the home

• location

• lot size

• number of bedrooms

• number of bathrooms

• total number of rooms

• garage(s)

• decks

• screened porches

• fireplaces

Secondary Enhancements Help a Home Sell

There are other bells and whistles the appraisers may factor in, but their impact on home value is marginal. Although these improvements do help the home sell, they do not impact the appraisal significantly.

Here are some examples:

• ceramic tile

• hardwood floors

• crown molding

• chair railing

• specialty counter tops, cabinetry

• sprinkler system

• wainscoting

• upgrades in light fixtures

• upgrades in faucets, sinks, tubs and showers

• swimming pool

Sell Your Home Quickly

Do not be mistaken upgrades are worthwhile because they will help sell your home quickly. For example, eye catching landscaping will lure people in to look at the home, because 80% of homebuyers decide if they like a house when they first drive up to the property.

When do I Need an Appraisal?

Home sellers may want to pay for a professional appraisal so they know the true value of their home, but they are not required to have an appraisal. Your realtor will determine an asking price with you. To determine a fair and marketable price for your home, expect your realtor to research comparable home sales on Multiple Listing Services (MLS). Homebuyers are required by the lender to have an appraisal done and they must pay an average of $300 500 for it. Payment is due at the time of the appraisal. The buyer does not have the right to choose the appraiser the lender does this. Loan officers keep an approved list of appraisers on hand.

Research on Home Value

While conducting research on home value consider this: Is the neighborhood you live in completely built out, or are you competing with new homes still being built? If you are putting your home on the market and would like to conduct some of your own research, you can do one of three things. Visit the courthouse in your county and see what has sold in your area that is similar to your home. Call your local realtor and ask for a comparative market analysis. Or, visit open houses in your neighborhood which are similar to your own, to see what they are selling for. All of these activities are a good education for homeowners interested in learning the value of their home before placing it on the market or refinancing.

About The Author

Elaine VonCannon is a REALTOR with RE/Max Capital in Williamsburg, Virginia, and she manages investment property as part of her business. Elaine is also an Accredited Buyer’s Representative as well as a Senior Real Estate Specialist. She has helped numerous clients invest in and make money on property in Southeastern Virginia. Visit http://www.voncannonrealestate.com.

vonmor1@cox.net

The Final Stages Of Buying A New Home In Spain

Writen by Mark Flanighan

So you signed for your new house about 2 years ago, all you saw was an artists impression but now we are coming to that time when you about to hand over the final payment and take ownership of your new home.

Spain has this illegal way of declaring the true value of the home, that all builders and solicitors still action as part of Spanish life. For example you will need to pay a 7% purchase tax on your new home, but if you state the value is 20% less and pay the last payment in cash to the builder you can save a substantial amount of money. Even though it is illegal it is almost an expected practice in Spain. However there is a draw back, for when you decide to sell there is also a tax on the profit you have made during your ownership, as you have under declared your home’s value, your profit margin then becomes artificially high, of which you pay tax on also. Of course the Spanish, will then under declare the buying price again to counter act that. You need to get a calculator out and decide what is the best option for you. If you intend to be there a long time, it could be you under declare, or if you know you will be selling in the near future, you declare the full value to reduce your tax bill later on.

Many agents that sell the properties have solicitors to help you with your purchase, but you need to be careful about this as they tend to serve the agents needs first rather than yours. Also there is a tendency to send ad hoc bills for certain parts of the transaction that when added up the end, costs more than having a separate solicitor.

Choosing when to take ownership is also a factor. This is because you are taking ownership of your home and not what surrounds it, so it very possible that you walk across a building site to get to your property. You then are living or holidaying on a building site until what surrounds your home, including walkways, parking and swimming pool is also finished. Make sure you either visit or get photos sent of what the surrounding area looks like and not just your property, it may be that you want to delay the day you receive your home until most things are finished. I say most things as it is unlikely that everything will be finished within the window they will give you to hand over your final payment.

When the day comes and you receive the keys to your home, you need to be aware that the responsibility for the property is now totally yours and that means ensuring basics are in place straight away. Examples of this are, insurance for buildings and contents, security bars, new properties in Spain are defiantly more likely to be hit by theives than existing ones.

New homes very rarely come with light fittings also. Your new home will have several bare wires hanging from the ceiling or even outside your doors where it is expected you will put welcome lights. Make sure you know how many lights you need to purchase for this day and don’t underestimate the time to fix them.

You can now have your furniture delivered and start doing some more DIY projects like fitting your curtain poles and curtains, fitting your washing machine and looking at your TV system.

Hopefully now you are ready to forget about the world and enjoy your new home in the sun.

Mark is webmaster for Home And Contents Insurance and La Cinuelica and Spanish Car Hire

Rapid City Real Estate Agents

Writen by Brandon Bruce

Take me Back to the Black Hills

Located in Western South Dakota, Rapid City is a thriving community with many amenities to offers its residents. This city is nestled among the beautiful Black Hills, offering endless recreational activities for the outdoor enthusiast in the Black Hills National Forest. It is home to the spectacular Mt. Rushmore National Memorial, the Crazy Horse Memorial, and many state parks with wildlife roaming free. It is common to see fields of buffalo and large, open grazing lands for livestock. Rapid City real estate agents can direct you to open farmlands or family housing in the suburbs; the possibilities are endless.

The weather in Rapid City, South Dakota is also a main attraction. With mild conditions year round, the temperatures rarely reach extremes. Summer months are warm and pleasant, around 70 degrees, while winters are mild with little snow.

Rapid City was founded in 1876 near the banks of Rapid Creek. John Brennan started the city as a resting town for miners on the way to the gold fields. It is now affectionately named the “Shining Star of the West,” and is South Dakota’s second largest city. With a population of over 62,000 people, Rapid City continues to expand into the surrounding areas. Many suburban communities have started popping up, bringing the total area population to nearly 100,000 people. Rapid City real estate agents have few problems selling land or homes in this beautiful area. Homes are very affordable, with the average price of $90,000. Many mountain homes located near lakes, rivers and ponds sell for just over that average price.

The city encompasses 35 square miles, with golf courses, sports fields, parks and biking/jogging trails traversing the city. There are many shopping centers, rodeos, the famous Black Hills Stock Show and the Central States Fair. If you’re looking for that old fashioned country feel, Rapid City real estate agents can find you the perfect home.

Real Estate Agents

One of your most valuable tools when buying or selling a Rapid City home is a real estate agent. There are many things an agent can offer to help you through your next real estate transaction.

Real estate agents are there to help you find the perfect home, or sell your existing home. It is in their best interest to make sure their customers are completely satisfied, as they do a lot of business through referrals.

They know the area and can help you search through hundreds of listings, or advertise your home to hundreds of potential buyers.

Rapid City real estate agents can direct you to neighborhoods that fit your lifestyle.

Negotiation is a big part of any real estate transaction, and an agent is the expert; your agent will work with both parities in order to find the best price for the home. They can also arrange for professional home evaluations and appraisals.

When buying or selling a home in South Dakota, a real estate agent will make sure it’s done right. Don’t make costly and unnecessary mistakes by attempting the transaction alone. Contact an agent today.

Inside Real Estate in a network entirely devoted to real estate information. Our staff of nationwide writers has provided a library of over 25,000 real estate articles. Inside Real Estate covers several topics from the basic “how to’s” of real estate to city specific real estate information.

Top 5 Reasons Not To Sit On Vacant Land

Writen by A. Greg Dickerson

1. Tax Benefits.

You can not depreciate undeveloped property. The IRS code only allows for depreciation of the improvements on the property and the contents separately. Depending on the tax bracket you fall into this one advantage could save you a lot of money.

2. Income.

Vacant land does not generate income unless can you can lease it out to a farmer or for storage or as a parking lot. When you build on the property you now have created a steady revenue stream coming in even when you are not there. Depending on the type of improvement you could even make it a business and write off even more expenses.

3. Net Worth.

Typically it can take a year or longer to build a home or commercial structure on a piece of land especially when you take into consideration the time it takes to get all the necessary approvals from al the local authorities. By the time you get the project finished and depending on the market you are in the property will be worth a lot more than you owe on it which will greatly increase your net worth.

4. Resale Potential.

It is usually a lot easier to sell a finished product than it is a vision of what could be. This is why building spec homes has become so popular. People just don’t have the time or the desire to make all the decisions involved with a building project from scratch. This works with commercial properties a swell as community developments and multi family like condos and town homes.

5. Leverage.

If you own the land outright or have a good bit of equity you can typically borrow 100% of the cost to build from the bank. Once the project is complete you can pull the equity out of the property tax free. This is a great strategy.

As the property continues to grow in value you can refinance and cash in. The best part about this strategy is you get to keep the property. You never have to pay any taxes unless you sell and then you do a 1031 exchange at that point and still avoid paying the taxes.

Greg Dickerson started with a small equity line of credit and turned it into millions in by investing in real estate. To hear his incredible story check out the hottest new real estate investing web site on the internet today!

Fractional Ownership And The Partition of Title

Writen by Luigi Frascati

Second homes are possibly the ultimate ’status goods’ - something that many people would like to have but no one really needs. Purchasing a second home, whether a place at the beach, the lake or in the mountains is a fascinating trend in real estate, but often times those who finally own one are quick to express frustration at not being able to spend more time there. It hardly makes sense to have the expense of a mortgage, upkeep, insurance and taxes for a place you don’t use more than a couple of weeks a year.

Fractional ownership, therefore, was developed to obviate to the superfluous costs associated with ownership of vacation properties. Modeled upon time shares, fractional ownership takes the practice one step further by fractionalizing the deeded titles of real property assets. As in time shares, certain privileges are granted to the individual owners, such as a number of days or weeks allotted for using the asset, and may also offer a proportionate share of income as well.

The main difference between fractional ownership and time shares is the manner in which title is held. Whereas time shares give the right to use of the real capital asset in accordance with the contract, but at some point the contract ends and all rights revert to the property owner, fractional ownership offers deeded titles and is, therefore, real property. The other big differences between time shares and fractional ownership holdings are prices, financing and fees. While time shares can be purchased for a few thousand dollars, fractional ownerships can run $100,000 or more much more.

Lenders are general restive when it comes to lending on fractional ownerships. This is due not only to the partition of a single title into many deeded ‘mini titles’, but also because of the difficulty in assessing a market value on the individual fractions. Market value in fractional ownership, in fact, is in direct function of all the strings that attach to them, such as usage time.

For instance, four investors may each own one equal fractional title in a chalet in Whistler, British Columbia, a typical Winter resort. The total aggregate market value of the chalet is $1 million, so that each investor should theoretically own a real property asset valued at $250,000. Unfortunately, because of the seasonal nature of the resort, the value of the fractional ownerships of the two investors that can use the chalet over the Winter months will likely be higher than those of the other two investors. This is so, because demand for chalets in Whistler is higher during Winter, so that values escalate accordingly.

As a direct and proximate result of a limited pool of financing, the market for fractional ownerships is limited as well, since the pool of prospective purchasers dwindles in tandem. And because of this, if the borrower defaults it could be difficult for the lender to sell the property. Additionally, maintenance fees running in the thousands of dollars per year tend to complicate matters further.

Under the circumstances, then, who buys into fractional ownership? Typically, they are people who could afford a vacation home, but don’t have the time to use it fully. Furthermore, the more expensive the property, the more fractional ownership makes sense. It is not a type of investment one would get himself into to make a killing in real estate. The fractions usually are sold at a premium, so unless the property values in a market just go through the roof, gains will be modest. But the vast majority of fractional ownership buyers are not real estate investors they are, more often than not, typical status good seekers looking for a getaway.

Luigi Frascati

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton Centre Realty in Burnaby, BC.

Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.

Investing in Residential Real Estate: Achieving Positive Cash Flow

Writen by Jeanette Joy Fisher

When investing in real estate, it is highly desirable to achieve positive cash flow on a month to month basis. This is true even if you are counting on property value appreciation to supply the bulk of your desired return on investment. If you are losing money month to month, you may find all of your eventual profits eaten up by the monthly drain on your income. This will be particularly true if there is a downturn in property values for a few years.

Worse yet, you may tire of the monthly outflow of cash, and you may give up on the property before you have a chance to achieve the desired appreciation. You will be much more comfortable waiting for your property to appreciate if you are making at least some money every month, or at least not losing money every month.

One exception to this rule is when you are purchasing a property to fix it up and flip it. While you are fixing it up, you may not be able to rent it out at all (depending on how extensive the work is) or you may have to rent it at reduced rates. The negative cash flow is just part of the expense of rehabilitating the property and will be quickly reversed by your profits upon sale of the property. This assumes that you have properly calculated all of your costs and you have purchased the right property.

In other cases, we think it is wise to achieve positive cash flow, Here are some tricks and ideas involving the financing of the property:

Lower cost properties are generally easier to rent at a profit than higher cost properties. It therefore makes sense to purchase two or three smaller homes than one larger one, if your intention is to rent them out.

If you don’t already own your own home, consider living in the first “investment” property you purchase. (This assumes it is convenient to live in the area where you want to invest.) Interest rates and down payments are lower for a primary residence. Also, you don’t have to deal with the problems of finding and managing tenants, paying for any damage they may cause, and absorbing the cost of an occasional vacancy. This will also give you very valuable experience in dealing with real estate.

If you live in a home for only two out of five years, it probably qualifies as a primary residence from the point of view of the IRS, and therefore appreciation of the property value is probably tax free up to a certain level (for federal income tax). Check with your tax advisor for the exact rules. So one strategy is to purchase a new investment property every couple of years, live in it for the first couple of years, then purchase and move into another property. Rent out the first one while it continues to appreciate. Since you live in each new house for the first few years, you can get a loan at primary residence rates, and you will also have the tax benefits of a primary residence, yet actually own several homes at the same time.

A “second home” (that is, a vacation home) also qualifies for preferential interest rates. You have to be able to state that you live there a portion of each year and you cannot claim rental of the property as income. There are other requirements such as location of the property. If this fits, consider making one of your investment properties a second home. Do check with your lender to be sure you know all the requirements for a home to be considered a second home before you go out and buy one. Note that with a second home, you cannot use any rents your charge as income. You will have to qualify for the loan based upon your income without considering any rental income from the second home.

The easiest and best way to achieve positive cash flow is to get a loan with a ridiculously low interest rate for the first several years. Nowadays, a number of lenders offer “payment option” loans. These loans offer an optional minimum payment that starts with a rate between 1% and 2%, which results in very low monthly payments. As a general rule, these low rates last for about 5 years. During this period, the minimum payment increases year to year by a very small amount, usually no more than a factor of 1.075 per year. If you take advantage of the minimum payment, you are actually charged a normal variable interest rate (such as about 4.5% today), but the interest you are not paying is deferred. At the end of the first five years, the interest you have not paid is added to the loan amount, increasing the loan amount by a relatively small amount. Ask your loan officer to calculate the exact amount. At that time, the loan then becomes a standard variable rate loan. This is not a problem because you can assume that property value appreciation will be far larger than the deferred interest. With this plan, you should plan to refinance or sell the property within 5 years, which is commonly not a problem. (Such loans may not be available in all states.)

Another way to minimize monthly interest payments is to obtain an interest only loan. The interest only period of most loans is usually 5 to 10 years. You should plan on selling or refinancing by the end of this period.

The interest rate you pay and your eligibility for special loans such as a “payment option” loan is subject to your credit rating, your employment status and the financial reserves (savings) you have on hand. Do everything you can to get your credit scores above average (above 640 and preferably above 680). Make sure you are steadily employed in one profession or engaged in your own business or profession for a period of at least one year steadily, and preferably two, and make sure you can prove it. Extended gaps in employment can make qualifying for a low interest loan much more difficult. Lastly, save up enough to make at least a 10% down payment. This will open the door to better rates.

Payment option loans as described above generally require 20% to 25% down payments. A down payment of 20% or more will also eliminate the need to pay for mortgage insurance. Mortgage insurance is charged by all lenders for loans with less than 20% down payment, even if it is not explicitly stated as such. The extra expense may be built into the rate (as is the case with so called “sub prime” or high risk loans), rather than stated separately, but it is there. Mortgage insurance covers the lender against the risk of a default, when there is not enough extra value in the property to pay off the loan and the expenses of foreclosure.

The above tips and ideas may get you started toward positive cash flow in your real estate investments. There are many other ideas that may apply to your particular circumstances or where you live or where you want to invest, and not all of the above ideas may apply to you. We are writing from the U.S. Outside of the U.S., laws and loan programs may be completely different than the above. In any case, please ask your loan officer or financial advisor for his or her opinion and ideas to verify and add to the above.

(c) Copyright 2004, Jeanette J. Fisher and Robert S. Kramarz. All rights reserved.

Jeanette Fisher, Design Psychology Professor, is the author of “Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits,” the only book to reveal interior design secrets on how to make top dollar investing in real estate. For real estate and interior design psychology books, articles, tips, and newsletters: http://www.doghousetodollhousefordollars.com.

Robert S. Kramarz is a loan officer for a major loan brokerage. He has over 20 years experience in finance and business management and comes from a family a long background in real estate investing and banking. He specializes in providing financing for purchase of investment real estate. He can be reached by email at MrFunding@22cv.com. Further information is available at the website http://www.sweetloan.info.

Arizona Real Estate - A Buzzing Hub for Real Estate Investors

Writen by Sam D’costa

One of the hottest and growing real estate market in the country is Arizona. For the past six to seven years the investors have described the place “hot”, due to the continuous rise in Arizona real estate prices that subsequently continues to attract buyers and sellers. It seems there’s no slowing of Arizona real estate appreciation. Starting from single family homes, condos or commercial properties prices in Arizona has climbed steadily and is still on the rise.

But even this unprecedented steady rise in home prices in Arizona doesn’t seem to depress any buyers. Recent statistics have shown home buyers are offering an average of 90 to 95 percent of the asking price for purchased homes.

Arizona real estate appreciation is envied by other states. What is the secret behind the steady appreciation of Arizona real estate prices? The bottom line definitely being the demand for homes in Arizona is relatively higher than the supply and the demand is increasing further to instigate the price shoot up. Some of the reasons are stated below for the continuing rise of real estate appreciation in Arizona.

Arizona is now a well established community for retirees. Various recreational facilities like golfing, hiking, fishing and horse riding are within the scope of the people. Comfortable weather conditions and affordable cost of living makes Arizona a sought after real estate establishment. For retirees Arizona is a paradise with the quietness’ of the mountains and harsh free winters.

Business boom in Arizona. Many modern companies have relocated in Arizona. One can also find renowned educational institutions in this region. Combined with superb climatic conditions, businesses find Arizona the perfect place to foster growth.

Compared to other states in USA, the real estate in Arizona is reasonably priced. The average home price in Phoenix is in the $300,000. Over the last 12 months the home values in Arizona has shown an appreciating rise of 25%.

No one can deny the profit potentiality in Arizona for real estate investors. This market has had a booming success in the last decade and is still on the rise. To investors, Arizona Real Estate is a great investment potential with a predictable demand for real estate in the future. As long as Arizona continues to showcase its favorable conditions, it is one of best in the real estate business.

Sam D’Costa is well known professional in Online Marketing and web promotions.

Arizona Real Estate

Property Investing Secrets 6

Writen by Rick Otton

Property Investing Secrets:

What No One Ever Tells You How Real Estate Agents Size Up Buyers

Here is the most important rule you must know about property investing: present yourself with confidence to the real estate agent. If you’re property investing and trying to buy your first property and you have never really dealt with a real estate agent, you’re probably not going to get a bargain. Most likely later, after you’ve made offers and gotten them accepted, will you then get better deals.

You see, the first time up you’re going to have to sound the agent out and see how much experience they have. If you’re dealing with the young pup in the office that has only been in the business 3 or 4 months, you don’t need to know a lot. You can probably even bluff them. But if you’re dealing with the principal, the owner of the business, who has been around for 20 years, they’re going to know that you’re not experienced property investing or more importantly that you’ve never bought in their area and then it becomes a real matter of brinkmanship with the real estate agent.

When property investing, you must convince the real estate agent that you’re serious. You can say, “Look I’m only in town for a couple of days.” (Even if you live locally, have flown in or driven from out of town.) “I’ve got to make a decision in a couple of days. I’m looking at a property in the $250,000 $290,000 price bracket.”

If you say, “I just want to buy a house, I don’t care where it is and I want a bargain.” The agent thinks this buyer has no idea. But the wise person who is property investing will say. “I want to buy in this price range, I want this rent and I want the property in this particular area.” The real estate agent will think, okay this buyer has done their homework. They know what they’re looking for. You can also say, “Look, I don’t pay full retail price, I expect a bit of a discount. What is the best property you’ve got that fits my criteria in that area?”

I’ve found when property investing, the more confident and specific you can be with a real estate agent by telling them what you’re looking for, the more the agent will give you credibility as having done your research and not wasting their time.

Rick Otton is the director of We Buy Houses Pty Ltd. He has been property investing full time for 14 years. Rick has completed over 351 property transactions in Australia and the United States.

Rick specialises in creating positive cash flow through a variety of strategies he perfected in the United States and adapted to Australian conditions. He sells home study courses on vendor finance, one year mentoring program as well as a yearly 3 day boot camp on the Gold Coast. Go to http://www.rickotton.com for more property investing information ring 1800 003 588 in Australia.

Florida is a Giant Sand Bar; Tall, Skinny and Flat

Writen by Lance Winslow

We often talk about the incredible surge in real estate values in the past five years in the Great State of Florida. The Hurricane State if you will as it is so flat that there is barely anything to slow down a massive Hurricane. But some still ask why anyone would pay that much to live upon a giant Sand Bar?

In fact most of Florida is a sand bar except the Panhandle and above Orlando area. There are a few places with rock underneath which extend past that along I 95 but lets face it Florida is a Giant Sand Bar, which is tall skinny and flat. Your perfect Runway Model if you, which is a good analogy as it is a beautiful sand bar at that? Surges in Real Estate is one thing, but is that the only type of surge we should be considering there?

But why would anyone, wish to live less than 12 18 feet above see level when Cat IV and V Hurricanes are known to deliver upwards of 20 feet storm surges. Can you say a submerged sand bar? And how do we know whole parts of it will not completely move someday? Shifting sand is well known on sandbars you see?

If you own Florida real estate I am not trying to hurt your property values and I truly wish you well, but from a philosophical stand point, you know that really does not make a whole lot of sense does it? Perhaps you will consider all this in 2006.

Lance Winslow