Are homebuyers and sellers the only ones who need transportation?

It would appear that Gov. Kaine thinks so. (thanks to Richmond Sunlight for pointing out this article)

Kaine is proposing a statewide 25-cent increase in the grantors tax, which is now 10 cents per $100 of assessed value, that owners pay on the sale of a house.

First, the grantor’s tax is paid based on the sales price of the house, not the assessed value.

Nuts and bolts - currently the median price in the Charlottesville area is about $275,000. Thus, the grantor’s tax paid by the seller on that particular transaction would be about $275 - and that’s a lot of money! If the tax is increased to 25 cents $687.50. Note also that this tax is paid only when a property sells (which is happening less and less frequently).

Make no mistake - Virginia’s (and the localities’) transportation systems need help; they need maintenance and they need new infrastructure - roads, bike paths, rail lines - but taxing only one segment of the population that uses the system is wrong. It is difficult to get hard, accurate data on what percentage of people in this area own their homes, but let’s assume it’s anywhere from sixty to seventy percent. Thirty to forty percent of people in the area won’t pay this tax, yet they will still use our roads, buses, etc. This is not a question of fair, but one of whether this is a reasonable proposal.

One reason that the grantor’s tax is proposed is because it is a bit of a hidden tax - it’s just another one of those fees that gets thrown together on the HUD-1 at closing. In the hot market, no one questioned the tax; now every nickel counts.

Why not a broad-based tax that everyone would pay (gas tax), other than lack of political and intestinal will and fortitude?

To target one segment of the population for a tax that needs to be focused on the entire population, regardless of the state of the housing market, is not right.

The best prediction from the Washington Post article goes to lobbyist Charlie Davis -

“At the end of the day, maybe putting a ‘lockbox’ on transportation funds, maybe a local taxing authority, but that is it. Give Kaine credit for pushing for something. The Republicans can be tagged as obstructionists but . . . Kaine came back with almost the identical plan that was shot down last year, so which is more foolhardy? But the session will provide ample opportunity for a lot of social interaction to discuss the presidential campaign and enjoy some wonderful cuisine at the Capitol snack bar.”

And he’s probably right.

Related posts -

Whom should we tax?

A few Transportation bills

Too funny not to post - Copy of the Republican Transportation Plan

Update 06/24/2008: C-Ville has a good article about the state of the transportation debate, including this:

In the event that Kaine’s latest bill goes through unscathed (which is about as likely as UVA winning this year’s NCAA football championship), we the people of Virginia would have the pleasure of paying: 1 percent more when we buy a car; $10 more for annually registering our cars; and, when we sell our homes, a 250 percent higher “grantor’s tax,” which would go from 10 to 35 cents per $100 of assessed value. Most of the $1 billion generated annually would go to highway maintenance, but the revenue from the grantor’s tax increase—about $150 million annually—would go toward mass transit.

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June 23, 2008 | Filed Under Buyers, Politics, Sellers, Transportation | 4 Comments 

Choosing the right buyer’s agent

Last week’s article in the Daily Progress was good, but as I told the journalist at the time - there is so much more I wanted to go into that article, and newspapers are so limited by what they can offer in print. They deal in inches, and for better or worse, bloggers don’t have those limitations. With that preface, this is one of things that didn’t make it in the article due in part to space limitations - My advice to buyers in the Charlottesville area -

Choose the right representation. Choose the right buyer’s agent. Choose someone whom you trust and get along with and like - not just because you met them at an open house, or because they have a blog, or because they are your sister’s husband’s friend who is just getting started and needs a break. Choosing the wrong representation is not just not worth it.

A good (great) buyer’s agent is someone who will advocate 100% on your behalf - simple. Contrary to public opinion, a good buyer’s agent is focused on the client’s needs more than their own. If you feel that “your” Realtor is focused more on the “sale” than your best interests - tell him.

Going waaay back in the archives to 2005, citing a WSJ article -

“Finding a real estate agent is kind of like dating. You have a small window to make an impression and then you’re with that person for a long time.”

Here is my business philosophy when I work with buyers - I want to sell their house when they move. Every buyer client represents a minimum of three transactions -

1) The house they are buying right now.

2) That house when they move (everybody moves, even if “this is the last house I am going to buy”)

3) At least one of their friends or family when my clients proselytize for me

I work with Buyer-Broker agreements with my buyers for a variety of reasons - first and foremost because we negotiate my fee upfront, and I am free from the perception that I am not showing unrepresented sellers’ (FSBO) houses or those houses that are offering lower commissions in the MLS than many Realtors are used to. And - it formalizes the contractual relationship that I have to my clients and that my clients have to me.

You can find a sample (although a bit dated) Buyer-Broker Agreement here.

Updated - this is a current sample Buyer-Broker Agreement. Note that it takes two sections to warn/educate about Dual Agency.

My advice is this - do your due diligence. If you have questions about the process, what questions to ask (or if you have an experience you would like to share) please contact me anytime.

——–

And the coup de grâce with regards to what blogs have over print - here are a bunch of very relevant links to help you get started in your research:

Here are some questions to ask when hiring a Realtor, courtesy of Redfin.

Do you like/do Dual Agency? One of my favorite posts I have written about Dual Agency is this - Dual Agency - Who Benefits? —- The Realtor.

Representation isn’t free

How to Choose a Realtor

Great Questions for a Seller to Ask

Questions to ask your (potential) agent in Charlottesville

Steering Buyer’s Agents

Why Use a Realtor - Decoding NAR-Speak

Rolling the Dice with Buyers

Being Selective

June 19, 2008 | Filed Under Buyers, Public Perception, Questions for readers | 6 Comments 

Negotiate anything

Even real estate contracts.

If more Realtors and buyers and sellers could or would recognize these simple facts, we would all be better off.

Good negotiations are not personal. When buyers and sellers focus on what the other person is getting, negotiations deteriorate.

I remember the conversation during the hot market about how the “seller shouldn’t make that much!” quite well - and each time it was irrelevant, but important to the buyer to have - if only to work through it.

Focus on what matters. Standing on principle and positions is a failing stance.

May 28, 2008 | Filed Under Buyers, General Real Estate, Sellers | 1 Comment 

Getting ready for Match Day March 20th

Match Day for Medical Residents is tomorrow, and the forums at StudentDoctor.net are a flutter.

This year’s Match Day is likely to prove to be a bellwether for the Charlottesville area real estate market. UVA Residents provide cyclical stability to our market - every year they cycle in and out, providing a constant in our market. I am curious as to what this year will bring.  Tuesday brought this email from another customer/resident with whom I have been working -

My confidence has been rattled.  I’ve been reading too many commentaries like (this one).

This just isn’t the time for me to buy.  I would likely need mortgage insurance to offset my low down payment, and the prospect of negative equity just sounds … plain negative!  I’ll keep saving for the down payment for the next year, and hopefully I’ll catch the market closer to this 25% expected further devaluation.

This would be completely different if I were making 60K rather than 40K.  I think that is the reality for a lot of people in my <40K boat.  I think we’d also be a great target for corporate or government assistance.  Empower me already!

I’m doubtful about the “25% expected further devaluation,” but if that’s the psychology of some of today’s buyers, that directly impacts the local real estate market.

For the past few years I have written about Match Day once or twice before at least, and this year is no different, but for one thing - the credit markets are much, much different this year (h/t VARBuzz) than in any previous year. One of the residents with whom I am working is comparing rates with the self-titled “Home of the Doctor Loan.” Stealing knowledge from a lender with whom I work frequently, Ken Mextorf of SunTrust, I learned this -

“The status of the Doctors Loan is not as bad as I was led to believe.  Yes, they are scrutinizing exceptions more thoroughly but they are still granting them.  There are no set in stone guidelines I can give you that are being used but some general parameters are:

- Can still go to 100% financing
- Credit scores should be above 700
- 2 months reserves after closing
- Debt to income around 50% (closely around)

Sometimes, exceptions are needed to get beyond the Debt to Income ratios which seem to be the greatest area of concern.  The mitigating factors that help to get an exception approved on a higher DTI are:

- The ability to put money down (5%)
- Higher Credit Scores
- More Reserves after the loan is closed.”

Hmmm - buyers need cash and good credit in order to qualify? Craziness! :) - and ultimately a good thing.

My advice to Residents (really to any Buyer) - work with a team of people whom you trust, prepare, know your options and move forward after performing adequate due diligence.

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March 19, 2008 | Filed Under Buyers, UVa | Leave a Comment 

Seeking a defense of Single-Agent Dual Agency

Will anybody defend the practice of the same Realtor representing both a buyer and seller on the same transaction? Find out at VARBuzz.

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March 12, 2008 | Filed Under Buyers, Sellers | Leave a Comment 

Buying new construction without a Realtor? Read this first!

If you’re thinking about buying new construction in the Charlottesville area or anywhere else, please, please, please be aware that onerous, hateful contracts are being used by some of the builders.

Contrary to the popular opinion that you can “get out of” any contract, these don’t fit that mold.

Try this out for starters -

Delivery Date, If Applicable: PURCHASER understands and accepts that there will be a longer than normal delivery date due to the location of this purchase being in a section currently not developed. SELLER will make all reasonable efforts to insure that a timely delivery is made. Any delivery date quoted is based on the best available information provided to SELLER at this time. The delivery date quotes should not be construed as a guarantee and SELLER contracts, will supersede any delivery date estimate.

That’s almost not so bad, despite the fact that there is really no guidance as to when closing might happen nor any penalties for not delivering a product by a certain time.

Purchaser and Seller shall jointly conduct the Pre-Settlement Inspection on a date and at a time specified by Seller, in its sole discretion, in accordance with he provisions of applicable laws. Seller will notify Purchaser when the condition of the site and the progress of construction is sufficient and appropriate, in Seller’s sole discretion, to permit the Pre-Settlement Inspection. It is  the mutual intent and understanding of Purchaser and Seller that the Pre-Settlement Inspection is a private inspection to be held in accordance with the terms and provisions of the Sales Agreement and applicable law and conducted in a manner acceptable to Seller in its sole and absolute discretion. Except to the extent otherwise provided by law, Purchaser is not entitled to be accompanied at the Pre-Settlement Inspection by any agent, family member or invitee including, without limitation, any home inspector (collectively, “Purchaser’s Agent”) without Seller’s express consent, which consent may be withheld in Seller’s sole discretion.
…
Purchaser acknowledges and agrees that if Purchaser is permitted to be accompanied by a Purchaser’s Agent at the Pre-Settlement Inspection … Purchaser’s Agent shall attend the Pre-Settlement Inspection as an observer only and under no circumstances will Purchaser’s Agent be permitted to perform any independent tests or inspection of the Property or in any way interfere with or actively participate in the performance of the Pre-Settlement Inspection. In the event of a breach or attempted breach of the restriction set forth in the immediately preceding sentence, Seller shall have the right to immediately stop the Pre-Settlement Inspection and require that Purchaser’s Agent leave the Property prior to resuming the Pre-Settlement Inspection.

Read: If the Realtor speaks, they can be asked to leave.

Let this serve as a warning to buyers - don’t become an example used as “what not to do.” I have heard of buyers who were suckered into thinking that they “had” to buy “today” in order to get the “best deal;” they sign the Contract and then go to a Realtor for advice - only to be told that the Realtor is, at that point, only able to say, “I’m sorry for you.” I have heard too many stories of buyers literally crying in the Realtor’s office after they signed the Contract without representation.

One size certainly does not fit all. Certainly, not all new construction contracts are this odious and one-sided, but buyers (and Realtors) need to be aware that this type of contract is out there, is being used and is being signed by Buyers without even a hint of Buyer Representation.

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March 11, 2008 | Filed Under Buyers | 12 Comments 

Why Should You Use a Realtor instead of a Builder Sales Agent?

Simple. If you hire an exclusive Buyer’s Agent to represent your best interests, you will have representation. If you work with a builder’s sales agent, in my opinion, you are on your own.

Buyers - educate yourselves about Buyer Agency and Dual Agency. Ask yourself - do you want someone looking out solely for your interests, someone looking out for the builder’s or somebody purportedly “representing” both sides?

(Thanks to the person in Las Vegas who came to my site searching for this answer)

I mentioned this a few weeks ago as well.

February 22, 2008 | Filed Under Buyers | 8 Comments 

Why take a Buyer’s Agent to new construction?

Jonathan has the answers.

1. Independent representation. The folks in the sales office are very nice and very helpful. They also work for the builder and are representing the builder in the transaction, not you. No matter how friendly they seem, they are not working in your best interests.

He lists nine more reasons. This is take from last year on “Default Position.”

February 3, 2008 | Filed Under Buyers | 1 Comment 

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