Home buying thread

Mizake · May 30, 2017

No, you are right, that's what happens.

Using made-up numbers, let's say someone buys a house brand new for $250,000. He/She is gonna pay taxes based off that $250,000 for years to come. The state (at least in California, where I'm at) will make small adjustments based on inflation, but they are tiny. Now let's say it's been 10 years, and you come in and buy it for $500,000. Guess what? The house value now readjusts to $500,000, and you are going to start paying taxes based on your purchase price.

Still, what are you gonna do? Unless you want to rent for the rest of your life, at some point if you decide to buy a house, you are going to have to jump in and take the hit. If the housing market remains strong overall in the coming decades, at least you can rationalize it as a tax savings as your home appreciates but you will still be paying taxes at your lower, purchase price rate.

Picasso3 · May 30, 2017

Mizake said:
No, you are right, that's what happens.

Using made-up numbers, let's say someone buys a house brand new for $250,000. He/She is gonna pay taxes based off that $250,000 for years to come. The state (at least in California, where I'm at) will make small adjustments based on inflation, but they are tiny. Now let's say it's been 10 years, and you come in and buy it for $500,000. Guess what? The house value now readjusts to $500,000, and you are going to start paying taxes based on your purchase price.

Still, what are you gonna do? Unless you want to rent for the rest of your life, at some point if you decide to buy a house, you are going to have to jump in and take the hit. If the housing market remains strong overall in the coming decades, at least you can rationalize it as a tax savings as your home appreciates but you will still be paying taxes at your lower, purchase price rate.

I dont understand

Picasso3 · May 30, 2017

Lanx said:
(we're just gonna buy the house outright, no mortgage), but all i gotta worry about is the)

property tax

home insurance

electric

gas

water/sewage

garbage?

That's all i have to worry about right?

Pretty much, make sure it's not in a floodplain!

Blazin · May 30, 2017

As far as the amount it really varies around the country. States that pay for schooling via real estate taxes can be quite high. Even within a state can be big differences from district to district . On a $250,000 house in PA would normally be about $6,000 in real estate taxes. New York and New Jersey can be even worse.

On new, there is no special new house tax just that their assessment on average always going to be higher than older homes. Or maybe better to say more accurate than higher.

Cad · May 30, 2017

Mizake said:
The state (at least in California, where I'm at) will make small adjustments based on inflation, but they are tiny.

This part definitely varies per state, in TX the appraisal districts screw you with 10% gains in boom years and then never want to lower it when there's a bust year, you have to go protest with comps in hand.

Lanx · May 30, 2017

Picasso3 said:
Pretty much, make sure it's not in a floodplain!

yea i just learned about sump pumps, lived in a ny house with a basement first 20years of my life, never heard of a sump pump, checking out houses, always in the alliance section i see:
garage open
range
microwave
sump pump

i'm like wtf is a sump pump...

Noodleface · May 30, 2017

In my state after two years the taxes were adjusted and it equates to an extra$200/month for us.

So that was fun

Unidin · May 31, 2017

Mizake said:
No, you are right, that's what happens.

Using made-up numbers, let's say someone buys a house brand new for $250,000. He/She is gonna pay taxes based off that $250,000 for years to come. The state (at least in California, where I'm at) will make small adjustments based on inflation, but they are tiny. Now let's say it's been 10 years, and you come in and buy it for $500,000. Guess what? The house value now readjusts to $500,000, and you are going to start paying taxes based on your purchase price.

Still, what are you gonna do? Unless you want to rent for the rest of your life, at some point if you decide to buy a house, you are going to have to jump in and take the hit. If the housing market remains strong overall in the coming decades, at least you can rationalize it as a tax savings as your home appreciates but you will still be paying taxes at your lower, purchase price rate.

That's because California has a cap on the value of the house going up for property taxes unless it changes ownership. It's 2%/year. So when prices are going up 5-10% per year (or more), property taxes don't keep pace. Once the house is sold, it adjusts to what it should have been all along and goes way up.

California Proposition 13 (1978) - Wikipedia

edko · May 31, 2017

In Florida we were assessed current value based on sale price, minus 2x homestead exemptions. Although the first year we paid pro rated to the prior exemption, which means when we eventually sell it, we will do the same at a higher rate. My neighbor down the street has an older home, but more sq footage and more sea wall, but pays much less because they have been there for a long time. Every state is different.

Threelions · May 31, 2017

Blazin said:
As far as the amount it really varies around the country. States that pay for schooling via real estate taxes can be quite high. Even within a state can be big differences from district to district . On a $250,000 house in PA would normally be about $6,000 in real estate taxes. New York and New Jersey can be even worse.

On new, there is no special new house tax just that their assessment on average always going to be higher than older homes. Or maybe better to say more accurate than higher.

Taxes on my new home in NY are around 7k (1600sq ft house). The purchase price was about 60k over what it was most recently appraised at, likely will be fucked in the a at some point down the road and have a raise in taxes.

AladainAF · May 31, 2017

Speaking of property tax -- and maybe this should be its own thread -- but I am getting tired of the government "creating" industries through burdening the citizenry. Before you roll your eyes, I'm serious about this. Let me explain, using the current property tax discussion as an example (I am in Texas).

Texas has no income tax, as such the property taxes are rather high as this is how most things are funded on a government level. I'm fine with this. However, Texas (and I assume most other states) allow the citizens to protest your appraisal by the end of May. I believe this is a great thing - it gives the citizens a voice to express and justify why their property should not be valued as high as it is. However, you get one chance to go in front of an ARB (Appraisal review board) to plead your case, and their determination is final (they can choose to do nothing to your value, or lower it - they can never raise it).

It's also a very burdensome process: You have to go to the tax office and wait a few hours in order to talk to a county appraiser -- and they will usually try to give you an offer on the spot which you can accept or not. If you do not then you choose in essense to go in front of the ARB, which they then schedule for a later date, where you have to go back to the tax office and wait a few hours to see the ARB to plead your case.

Ok, so this still was never a problem for many years. Appraisals were largely fair and in line. Nice lots were appraised higher, nicer homes in certain neighborhoods were appraised higher, etc. However, a new industry started to form which were property tax firms that would represent you in front of the ARB for you -- and this service was FREE if they could not lower your appraised value. If they did lower it, you would generally pay a fee - usually 30-50% of the tax saved. In other words, it was a no lose scenario -- You just filled out a form, gave them the address and they took it from there. If they failed, you owe nothing. If they are successful sure there's a fee but you still save money in the end and you really didn't have to do anything.

As a result of this new industry, though, now appraisals are completely out of whack. Some homes are ridiculously expensive, some homes go up 25-40% in value over 1 year (caps at 10% if its your homestead, but if not you owe it all). Homes that are the most modest, tiniest home on the street are worth 10-20k more than the biggest most grandiose one in the neighborhood, etc. The government now expects everyone to use these services, and simply "subsidizes" them by appraising for absurdly high home values knowing full well any reasonable person will use a firm to get it lowered and thus paying these firms.

I know a tax guy who got out of this business after representing me, and his exact words to me were striking: "We did get some reductions for you last year. Below is a table of the results. We are not going to be representing properties that rely on the sales comparison approach going forward. Software is the main key in fighting typical residential/commercial assessments and we focus more on special purpose properties that rely on the cost approach and income approach to value." In other words, its just a software number crunching game. Crazy. Why can't the government just do this?

It's an epic scam but one youre dumb to not use (unless your time aint worth shit), and it's really grated on my nerves... Even though I use such firms, since I have several rental properties, scattered across four counties so I'd have to do four different tax offices to get outcomes.

Threelions · May 31, 2017

AladainAF said:
Speaking of property tax -- and maybe this should be its own thread -- but I am getting tired of the government "creating" industries through burdening the citizenry. Before you roll your eyes, I'm serious about this. Let me explain, using the current property tax discussion as an example (I am in Texas).

Texas has no income tax, as such the property taxes are rather high as this is how most things are funded on a government level. I'm fine with this. However, Texas (and I assume most other states) allow the citizens to protest your appraisal by the end of May. I believe this is a great thing - it gives the citizens a voice to express and justify why their property should not be valued as high as it is. However, you get one chance to go in front of an ARB (Appraisal review board) to plead your case, and their determination is final (they can choose to do nothing to your value, or lower it - they can never raise it).

It's also a very burdensome process: You have to go to the tax office and wait a few hours in order to talk to a county appraiser -- and they will usually try to give you an offer on the spot which you can accept or not. If you do not then you choose in essense to go in front of the ARB, which they then schedule for a later date, where you have to go back to the tax office and wait a few hours to see the ARB to plead your case.

Ok, so this still was never a problem for many years. Appraisals were largely fair and in line. Nice lots were appraised higher, nicer homes in certain neighborhoods were appraised higher, etc. However, a new industry started to form which were property tax firms that would represent you in front of the ARB for you -- and this service was FREE if they could not lower your appraised value. If they did lower it, you would generally pay a fee - usually 30-50% of the tax saved. In other words, it was a no lose scenario -- You just filled out a form, gave them the address and they took it from there. If they failed, you owe nothing. If they are successful sure there's a fee but you still save money in the end and you really didn't have to do anything.

As a result of this new industry, though, now appraisals are completely out of whack. Some homes are ridiculously expensive, some homes go up 25-40% in value over 1 year (caps at 10% if its your homestead, but if not you owe it all). Homes that are the most modest, tiniest home on the street are worth 10-20k more than the biggest most grandiose one in the neighborhood, etc. The government now expects everyone to use these services, and simply "subsidizes" them by appraising for absurdly high home values knowing full well any reasonable person will use a firm to get it lowered and thus paying these firms.

I know a tax guy who got out of this business after representing me, and his exact words to me were striking: "We did get some reductions for you last year. Below is a table of the results. We are not going to be representing properties that rely on the sales comparison approach going forward. Software is the main key in fighting typical residential/commercial assessments and we focus more on special purpose properties that rely on the cost approach and income approach to value." In other words, its just a software number crunching game. Crazy. Why can't the government just do this?

It's an epic scam but one youre dumb to not use (unless your time aint worth shit), and it's really grated on my nerves... Even though I use such firms, since I have several rental properties, scattered across four counties so I'd have to do four different tax offices to get outcomes.

Do they take their "fee" out of your reduced property tax payment, or is it a binding agreement between you and this "appraisal company". By this, I mean do you end up just paying cash to them or is there some sort of third party system that makes payment to them on your behalf. It's a crock of shit either way. It reminds me a lot of lawyers who are willing to represent you in certain lawsuits or settlements or Social Security disability who will only charge you if you win (mainly because their clients don't have two pennies to rub together).

AladainAF · Jun 1, 2017

Threelions said:
Do they take their "fee" out of your reduced property tax payment, or is it a binding agreement between you and this "appraisal company". By this, I mean do you end up just paying cash to them or is there some sort of third party system that makes payment to them on your behalf. It's a crock of shit either way. It reminds me a lot of lawyers who are willing to represent you in certain lawsuits or settlements or Social Security disability who will only charge you if you win (mainly because their clients don't have two pennies to rub together).

Nah it's just a straight up fee. If I owe $5,000 in tax and they manage to reduce it to $4,000, I'd owe them 40% of the saved amount (so $400). It's turned into a huge industry in Texas, Austin alone has like 10 firms that do nothing but this.

Siliconemelons · Jun 2, 2017

Re: property tax

there are different types of sales, at least in Florida. Qualified, unqualified etc. so to say - I bought a house at 5$ I only pay 5$ in property tax hahahhha! is not exactly correct- the tax office is smarter than that.

Mine, purchased in estate agreements and whatnot - was deemed unqualified - AKA I did not pay a "true market value" so my taxes were then based on what the property appraiser decided it was worth - not what I paid... although they are very close, because I did pay market- it just the type of sale was "true market" it was because of the method and hows-how I bought it at that made it unqualified.

This is also how they get more/new taxes from homes being passed down- you cant just say "lol mom sold me the house for 1$!" and then pay 1$ in tax.

Lanx · Jun 2, 2017

Xadion said:
Re: property tax

there are different types of sales, at least in Florida. Qualified, unqualified etc. so to say - I bought a house at 5$ I only pay 5$ in property tax hahahhha! is not exactly correct- the tax office is smarter than that.

Mine, purchased in estate agreements and whatnot - was deemed unqualified - AKA I did not pay a "true market value" so my taxes were then based on what the property appraiser decided it was worth - not what I paid... although they are very close, because I did pay market- it just the type of sale was "true market" it was because of the method and hows-how I bought it at that made it unqualified.

This is also how they get more/new taxes from homes being passed down- you cant just say "lol mom sold me the house for 1$!" and then pay 1$ in tax.

is this what happens in auction/forclosed houses? you pay 100k for a house and some guy just comes over (after you renovated it) and says it looks more like 250k

Burnesto · Jun 2, 2017

Where I live they really only have lot size, age, and exterior condition to go off of. Every five years or so someone from the county goes around and takes pictures of the homes. Then they assess the updated values based on that.

Renovating the interior wouldn't really tip them off until you sold it for vastly higher than expected. Then it's the next person's problem.

For instance, my parents have a basement that's around 2,000 square feet and about 95% finished. To this day it shows up as 0 finished square feet on the auditor's website.

Threelions · Jun 2, 2017

Burnesto said:
Where I live they really only have lot size, age, and exterior condition to go off of. Every five years or so someone from the county goes around and takes pictures of the homes. Then they assess the updated values based on that.

Renovating the interior wouldn't really tip them off until you sold it for vastly higher than expected. Then it's the next person's problem.

For instance, my parents have a basement that's around 2,000 square feet and about 95% finished. To this day it shows up as 0 finished square feet on the auditor's website.

The property I am purchasing now has been appraised three times already within the past month. Not sure yet when this new appraised value will f my taxes right up. House was sold at auction for 70k, fixed up right and sold for 225k.
Previous tax assessment was done for 165k

Big_w_powah · Jun 2, 2017

I work for a software vendor in Texas that supplies Appraisal software..let me add to the below

AladainAF said:
Speaking of property tax -- and maybe this should be its own thread -- but I am getting tired of the government "creating" industries through burdening the citizenry. Before you roll your eyes, I'm serious about this. Let me explain, using the current property tax discussion as an example (I am in Texas).

Texas has no income tax, as such the property taxes are rather high as this is how most things are funded on a government level. I'm fine with this. However, Texas (and I assume most other states) allow the citizens to protest your appraisal by the end of May. I believe this is a great thing - it gives the citizens a voice to express and justify why their property should not be valued as high as it is. However, you get one chance to go in front of an ARB (Appraisal review board) to plead your case, and their determination is final (they can choose to do nothing to your value, or lower it - they can never raise it).

It's also a very burdensome process: You have to go to the tax office and wait a few hours in order to talk to a county appraiser -- and they will usually try to give you an offer on the spot which you can accept or not. If you do not then you choose in essense to go in front of the ARB, which they then schedule for a later date, where you have to go back to the tax office and wait a few hours to see the ARB to plead your case.

Ok, so this still was never a problem for many years. Appraisals were largely fair and in line. Nice lots were appraised higher, nicer homes in certain neighborhoods were appraised higher, etc. However, a new industry started to form which were property tax firms that would represent you in front of the ARB for you -- and this service was FREE if they could not lower your appraised value. If they did lower it, you would generally pay a fee - usually 30-50% of the tax saved. In other words, it was a no lose scenario -- You just filled out a form, gave them the address and they took it from there. If they failed, you owe nothing. If they are successful sure there's a fee but you still save money in the end and you really didn't have to do anything.

As a result of this new industry, though, now appraisals are completely out of whack. Some homes are ridiculously expensive, some homes go up 25-40% in value over 1 year (caps at 10% if its your homestead, but if not you owe it all). Homes that are the most modest, tiniest home on the street are worth 10-20k more than the biggest most grandiose one in the neighborhood, etc. The government now expects everyone to use these services, and simply "subsidizes" them by appraising for absurdly high home values knowing full well any reasonable person will use a firm to get it lowered and thus paying these firms.

I know a tax guy who got out of this business after representing me, and his exact words to me were striking: "We did get some reductions for you last year. Below is a table of the results. We are not going to be representing properties that rely on the sales comparison approach going forward. Software is the main key in fighting typical residential/commercial assessments and we focus more on special purpose properties that rely on the cost approach and income approach to value." In other words, its just a software number crunching game. Crazy. Why can't the government just do this?

It's an epic scam but one youre dumb to not use (unless your time aint worth shit), and it's really grated on my nerves... Even though I use such firms, since I have several rental properties, scattered across four counties so I'd have to do four different tax offices to get outcomes.

These firms are the fucking bane of the CAD (county Appraisal Districts) too. They hate this shit.

I also hate these cunts, because I have to spend hours a week blocking IP ranges in IIS to stop these cunts from scraping the public appraisal and tax records websites that we provide counties.

Lanx · Jun 2, 2017

Big_w_powah said:
I work for a software vendor in Texas that supplies Appraisal software..let me add to the below

These firms are the fucking bane of the CAD (county Appraisal Districts) too. They hate this shit.

I also hate these cunts, because I have to spend hours a week blocking IP ranges in IIS to stop these cunts from scraping the public appraisal and tax records websites that we provide counties.

couldn't they just then scrape from zillow/trulia?

Big_w_powah · Jun 2, 2017

Lanx said:
couldn't they just then scrape from zillow/trulia?

I'm sure they can, and they do.

But our websites (and our competitor's websites) tend to tie directly into the data a CAD has for the properties, making it the most accurate source.

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Home buying thread

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