PVP

Friday, March 30, 2018

 Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another


The California Association of REALTORS® (CAR) is attempting to qualify a ballot initiative, The Property Tax Fairness Initiative, that will restructure the way property taxes are calculated for buyers over the age of 55 (and also the disabled and/or natural disaster victims). In many cases REALTORS® are already circulating petitions asking for ballot-placement of the initiative, and, in short order, professional signature-gathering organizations will be engaged as well.

CAR's approximately 200,000 members have been assessed $100 each in support of the effort; and there are expectations that the Association's substantial reserves will also be tapped in efforts to support the initiative's passage.
What would this accomplish and why is it needed? In what follows I will seek to summarize CAR's answer to those questions. 
First: the why?

As is well-known, California is currently experiencing a shrinking inventory of housing available for sale. This lack of supply has driven up prices, which makes it extremely difficult -- in many cases, impossible -- for first-time buyers to enter the market. In many cases, it also makes it difficult for move-up buyers to find replacement property.

There are, no doubt, multiple causes for this, but, no doubt, a major one is this: nearly 75% of California homeowners 55 years of age and older have not moved since the year 2000!

Why? Because of the way property taxes are calculated under California's Proposition 13. For tax purposes, properties are valued on the basis of purchase price, not current market conditions.

(Example: Suppose I bought my house for $600,000 a few years ago; and that my neighbor bought the same model -- as identical as can be -- in this heated market for $800,000. My tax will still be calculated on $600,000, whereas his will be based on $800,000.

CAR says, "A large part of the reason why [55 and overs are not moving] is that, even if they want to downsize or move closer to family, the prospect of a property tax increase of 100, 200, or even 300 percent, effectively locks our parents and grandparents in their homes." Thus, CAR maintains, "…The Property Tax Initiative…will help these homeowners to sell their current homes and move without being subjected to a what is effectively a massive "moving penalty."

How will it help? By modifying current law to expand the conditions under which those over 55 would be allowed to transfer their current tax base -- based on their original purchase price -- to a replacement home that they are purchasing.

Currently there are only limited conditions under which someone over 55 may transfer his or her old tax base to a newly purchased home. The Initiative would expand this. "C.A.R.'s Property Tax Fairness Initiative would allow homeowners 55 years of age or older to transfer their Prop. 13 tax base to a home of any price, located anywhere in the state, any number of times."
CAR's talking points offer two examples of what would happen if the Initiative should pass.
Buy Up Example

  • Original Purchase Price: $100k
  • Estimate Property Taxes: $1K/annually
  • Existing Home Sale Price: $300k
  • New Home price: $400k
  • New Property Taxes: $2k/annually
The $100k difference between the $300k sales price and the $400k purchase price is added to the original Prop.13 property tax base of $100k for a new Prop. 13 tax base of $200k. The buyer still pays their fare share of taxes but isn't blocked from making the move.
Buy Down Example

  • Original Purchase Price: $100k
  • Estimated Property Taxes: $1k/annually
  • Existing Home Sales Price: $300k
  • New Home Price: $200k
  • New Property Taxes: 1/3 of $200k = $67k [value] or $670/year for property taxes
If a homeowner buys a less expensive home, the property taxes will be proportionally the same as for the original home. In other words, if the tax base was one-third of the sale price, the new property tax would be one-third of the new sale price. Buying down reduces the homeowner's annual property tax bill.

Among the objections raised to the Initiative is that it will reduce revenues to local governments. In response to this, CAR says: "The revenue loss is the result of a ‘static' analysis -- it only looks at the revenue lost, not the revenue gained which a ‘dynamic' analysis would do. All buyers of homes formally owned by a senior homeowner will have the home reassessed to market value and pay property taxes based on the reassessed value."
Lots to think about.
Written by Bob Hunt


PIERVIEW PROPERTIES Real Estate
302 N. Cleveland St.
Oceanside, CA. 92054
David J. Albert - Broker-Owner
760 822-7403
"Serving Oceanside Communities Since 1976"

Tips For Negotiating With Sellers


If you dread the negotiating process when buying a home, never fear as PIERVIEW PROPERTIES Real Estate Agents (PVP) are experienced negotiators which helps keeping the bargaining from becoming emotional and veering off track.

Your agent must know your desires by heart and have quick access to you if a negotiation point needs to be made. It's important to stick to the strategy you and your agent have agreed upon - showing the seller how strong your offer is.

First and Most important, get pre-approved for your mortgage loan. That means your mortgage lender has reviewed your credit history and assets, checked employment and income, examined your debt-to-income ratios, and has pre-approved you for a certain amount, terms and interest rate so you know exactly how much you can spend.
Being pre-approved shows sellers that you're prepared and able to buy. Before you submit an offer, ask your PVP Agent to find out more what the seller wants as far as terms. The more your offer matches up with the seller's requests, such as a closing date, the more likely your offer will be accepted.

Find out when the house will be vacated, if any repairs or improvements are planned, and if the seller has any pressure points such as a relocation deadline. Also, you'll want to review the seller's disclosure of the condition of the property.

Your PVP Agent will also find out if other offers are on the table. Your position is stronger if there are no other offers. The seller may be less likely to bend on price concessions or repairs if there are other offers.

Have your PVP Agent pull up the most recent CMA (comparable homes recently sold or on the market) within a reasonable radius of the home, so you can sculpt your offer price. Be sure that you are comparing apples to apples in terms of updates, size of the home, amenities, location, schools districts, etc.
Once these steps are made, you are ready to write an offer.

Making the offer
What can help is thinking like the seller, which can anticipate what the seller will accept in price, terms, and other conditions. By considering the seller's position, you will likely create an offer that is either accepted or strongly considered.

Your offer should be clear on the terms, closing dates, repair requests or other conditions the seller needs to meet and it should be accompanied by a letter from your lender that you are pre-approved to buy the seller's home. Include a cover letter summarizing your strengths as a buyer in terms of creditworthiness, flexibility in closing, and the strength of the offer.
Home For Sale
Keep in mind that this is the sellers home, so don't insult the seller with an offer that's too low or requires too many concessions. The seller may be nostalgic about his or her life in the house and may not like the idea that you want to remodel.

The only thing a seller can't argue with is a strong set of comparables that show the home is overpriced or out of date. These are homes that have sold that are nearby being similar in age, size and features. If you can show that a similar home has sold within the last two months for less than the seller is asking, that's good.

Be sure all conditions, repairs, etc. are agreed to in writing. Some sellers may feel that a handshake covers a promise, but it's essential to be clear on paper what is expected and when. A seller's promise to paint should be included as an addendum to the contract and include all details, such as primer, exact color and type of paint, how many coats, and when the work will be finished for inspection.

Negotiating after inspections
The offer is negotiated and accepted, the earnest money is at the escrow agent's office. Now the inspections occur, and this is where the contract negotiations can break down. 

No home is perfect, not even brand-new construction. During the inspection process, the inspector is usually required to tell you about any condition of appliances, heating and cooling systems, roofs, electrical and plumbing systems, etc, and if your future home is up to current city codes.


Sellers are usually not required to bring a house completely up to current local building codes. Try and negotiate a repair only when a system is unsafe or a major repair is needed to make the system operate effectively.

As long as the seller has a reasonable explanation of what your position is and why, and communication remains open, the seller should have as much desire to make the contract work as you do.