patrick.net

I like that your service allows people to self-qualify for a loan modification. I think many people in this area would qualify but have given up due to the complexity of loan modification paperwork. Having an online tool is great.

FHA requires certain things in the inspection that the current owners / bank may not want to deal with.

http://www.biggerpockets.com/renewsblog/2010/04/25/fha-property-inspection-checklist/

FHA and VA loans usually take longer to close too. We fought hard and got ours closed in 30 days.

dunnross says

pkowen says

I was browsing Detroit area (upscale NW suburbs) houses and “zestimate” for many houses was TWICE the asking price. I.e. DOUBLE. Like, asking $325,000 (and not sold), Zestimate $650,000.

Zestimate is utter BS.

Zillow is not bullshit. As long as you know that it shows “Wishful thinking” prices, not actual selling prices. In Detroit the “Wishful” prices are 2x of the actual selling prices. In the Bay Area, the buyers don’t seem to be as bright as the ones in Detroit, so the “Wishful” prices closer approximate the selling prices.

Well, I stand corrected. Should be the "Wishtimate".

VA loans are a pain. So many inspections, changes, rules and on and on and the seller pays for closing costs. I sold a house in rural Napa county in the 90s and even though the septic was working fine (even a licensed septic guy came out and said it was working well and he stood to gain by doing work) and had been pumped a year earlier the VA required the leach field to be ripped out and re-done at my expense. You even have to have an appraiser that is certified by VA. When I sold another home not long after that ordeal, I directed the realtor to not even bring me another VA offer. About a week after putting another property on the market he called to tell me it was a VA loan but they would offer several thousand above asking to take care of the closing costs, etc. so I sold it with the buyer using a VA loan.

: )

One problem though is that this will utterly gut the REIT business model.

All those self-storage places sitting on their land waiting for it to ripen will get get hit with the tax rise, since Prop 13 is very kind to this type of land-hoarding.

Hey Patrick, why are you not shutting down this parade of dummy accounts?

Looks like people flagged several down already (three flags will put them back into moderation) and I deleted a few. I like to give the benefit of the doubt, but overly complimentary comments from new users seem like they must be shill comments. I have to admit that Carla wrote me wanting me to link to her business in the newslinks, and I myself suggested she post to the forum to see what you all thought.

I love it!

This provision sounds like a bit of a scam though:

"Senior homeowners aged 60 or older will be able to defer until July 1, 2020 all land taxes in excess of the property taxes they paid in the year preceding the July 1, 2011 effective date of the reform. "

Why should mega-rich senior citizens be exempt? Only poor senior citizens should be exempt.

Wow.
This engine didn't like some of my ascii

Sorry reposting...

See? This is what I'm always pointing out... Finding a graph that backs up your claim that (insert what your claim is as I'm a little lost...)... well it's possible. And by the looks of your graph there... Hey! Things are looking up...

or wait...

If you're still in the market... isn't it better prices go down so you can buy more houses, insert more tenants and grow your empire? Surely... as you claim... you're an income investor, wouldn't that be the best scenario?

So why would you want prices to rise?

Unless you're worried that a drop in prices will lower home values to the point that tenants would rather buy than pay your rents. So you'll eventually be forced to lower them. Sure you would still be in the black, but your original $$ would serve you better invested elsewhere.

My last guess is that you're a bit of a pompous old fart (I know I am) and can't believe with all your careful research and pouring over data that you may... just may... have jumped into the landlord market a little early and because you made so much noise while doing it... well now you have egg on your face.

If you do answer this post, here's my question:

Why do you want home prices to rise? Which it seems to me you're fervent about...

I love it!
This provision sounds like a bit of a scam though:

“Senior homeowners aged 60 or older will be able to defer until July 1, 2020 all land taxes in excess of the property taxes they paid in the year preceding the July 1, 2011 effective date of the reform. “

Why should mega-rich senior citizens be exempt? Only poor senior citizens should be exempt.

Well, for one most of the mega rich are senior citizens.

Troy says

One problem though is that this will utterly gut the REIT business model.

It will gut lots of business models. Anybody that's a homeowner would lose MASSIVELY, since all their sudden the costs of home ownership go way up. Of course that will be offset by elimination of sales and income taxes. There would be lots of losers and winners in the short term, even if in the long term everybody is better off.

I think it's actually a very sensible way to tax, but it's never going to happen. Hell, prop 13 it still a third rail.

First of all, thank you Patrick for letting me post here. Nevertheless, I wonder why the overly trashy messages were not flagged when people started to call me "Bitch". Do readers here prefer garbage? I want to remind everyone that it is very common in the real world for supporters to write positive reviews. There should be no need to remove them. The way I see it, it is not up to the readers or even the moderator or owner of the Forum to determine which comments are properly motivated and why? But it is needless to say that what should be removed and moderated is unprofessional and irrelevant language.

In a sense, what this really would do is revoke private ownership of land, and instead all land is leased from the state. Financially speaking it's not much different (25% different to be exact)

Given that this "tax" is really just like paying rent to the state, I actually like a market based solution better. Rather than having the rental value (tax) assessed, the land just gets leased on 10 years terms to the party that bids the highest rental rate (call it a tax if you insist). Fully transferable of course within local land use laws, and anytime a party voluntarily gives up use of the land, it's rented again at market rate. It's pretty hard to complain about your taxes if you actually bid the rate.

Good point! If you bid your tax rate, well, that was your own choice.

I also like it being fixed for some reasonably long time. 10 years seems a bit too long to me, since most owners actually own for only 6 years on average. But I could live with 10 years.

Of course there will be the cases where someone hits the 10 year mark and then gets outbid for their own land. The spectacle of people being forced out of what was their home for the last 10 years could be politically bad for this law. But then, it happens today with property taxes anyway.

Say, I think in China the government already is explicitly the landlord for all land. And their system seems to be working better than ours at the moment!

Say, I think in China the government already is explicitly the landlord for all land. Their seems seems to be working better than ours at the moment!

Yes, I was going to mention that as well.

It's still common in Chinese influenced cultures for land to be leased by wealthy old money land owners for long periods of time, and they have nothing to do with the activities or buildings on the land. They're just a parasite. Really it's the cornerstones of any feudal system. Your (land) Lord charges too much rent to farm their land and you go find another lord.

I see no reason not to turn Feudalism on it's head. Since somebody is going to be the parasite from land ownership, it might as well be the democratically elected government.

carlaghosn says

The way I see it, it is not up to the readers or even the moderator or owner of the Forum to determine which comments are properly motivated and why? But it is needless to say that what should be removed and moderated is unprofessional and irrelevant language.

Is this a fucking joke?

I see it as a huge tax loophole. I'm not big on taxes, but I don't think someone making a large sum of money should be exempt from taxes on profits. It seems like there is a possibility a company down the street could potentially end up paying the same amount of taxes as homeowners, depending on how it is zoned, of course. It also seems like a way to place the tax burden on property owners. Taxes are necessary for a civilized society to function and I really think everyone should contribute. Not just property owners.

Say, I think in China the government already is explicitly the landlord for all land. Their seems seems to be working better than ours at the moment!

And how did that work out in the Soviet Union?

kc6zlv says

I don’t think someone making a large sum of money should be exempt from taxes on profits.....Not just property owners.

I see a huge difference between somebody who makes a profit through passive rent-seeking, and somebody who makes a profit from productive enterprise. The later should be discouraged, and the former encouraged.

SubOink says

gameisrigged says

Zillow is utter bullshit. It’s in a league of its own.

In my area, its spot on with rent price estimates. And it does show the exact price a house sold at. Not sure what’s utter BS about that. Do you mean the Zestimates? Those are sometimes good and sometimes off, because they don’t know if a house is updated inside, or mold infested. Our house got appraised by the bank within $1k of the zillow zestimate. I thought it was pretty interesting.

Sometimes good and sometimes off? Do you find that a laudable goal?

Be careful every one.. The banks are telling Brokers to list homes for up to $50,000 $80,000 more then they really want..

Why because the cash buyers are really coming in with low offers. the banks think they can get closer to what they want this way... WE CANT SELL THEM AT THE LOWER list PRICE?????? stupid f-uckers

I am an agent and we had to list a number of homes that did not sell , with a higher price of $50,000-$80,000.. more on top of the Original list price,,,,, we will never sell them homes..
the banks are so f-ucked up..

All I can tell you folks out there is when you submit in offer on a home submit it $80,000 lower then asking, because its rigged by the banks,, their greedy son's of a bytchs.

we arer not selling shitt in the office.

I have 2 friends that are realtors and they told me that they are having a very difficult time closing a deal because everytime they get an offer in, some cash investor comes along and snags it right in front of them. They are very frustrated and haven't seen a comission in months. This is in the LA neighborhood.

Of course, I don't feel too bad for them because they made a killing between 1998-2006. You win some, you loose some. Or, you could get a real job like the rest of us :)

Okay, that was mean...I apologize but it just slipped out. No pun intended.

kc6zlv says

And how did that work out in the Soviet Union?

Good point! The Soviet Union failed because it did not let people keep the results of their own work. That system is exactly the opposite of what is being proposed here.

Land is not the result of anyone's work. So land is exactly the right thing to tax. Not labor.

A land-value tax also has the practical advantage that you can't hide land, and taxes paid are all public record. No one can evade the tax, except by corrupting the laws to get exemptions for themselves. Say, for example, by exempting everyone over 60 regardless of wealth...

lisa and Daniel says

Be careful every one.. The banks are telling Brokers to list homes for up to $50,000 $80,000 more then they really want..
Why because the cash buyers are really coming in with low offers. the banks think they can get closer to what they want this way… WE CANT SELL THEM AT THE LOWER list PRICE?????? stupid f-uckers
I am an agent and we had to list a number of homes that did not sell , with a higher price of $50,000-$80,000.. more on top of the Original list price,,,,, we will never sell them homes..

the banks are so f-ucked up..
All I can tell you folks out there is when you submit in offer on a home submit it $80,000 lower then asking, because its rigged by the banks,, their greedy son’s of a bytchs.
we arer not selling shitt in the office.

Hey, too bad it is the banks and not the agents have nothing to do with higher listing price.

"Both ground- rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them."

Adam Smith

lisa and Daniel says

All I can tell you folks out there is when you submit in offer on a home submit it $80,000 lower then asking, because its rigged by the banks,, their greedy son’s of a bytchs.

I'm going to look at a house this weekend. Foreclosure. Depending on how much work needs to be done, I'm not going to offer more than 90% of its list price. I can tell that they aren't pricing as low as they used to, so I'll start there and work my way down depending on how much $ the house needs. Then again, I might not make an offer at all. But your theory may be correct if my anecdotal observations aren't wrong. After all, they are controlling the volume of houses they're putting on the markets.

The predictions of economists are about as reliable as fortune tellers and those who read the entrails of dead goats.

The models are always accurate -- if all the presumptions are right and all the presumptions are never right. The result is a huge opportunity for error over certainty. See this gem from 2006:

http://www.youtube.com/watch?v=lPnA1cnewLA

Btw, I am curious who these cash buyers are?

I just heard about two transactions in my neighborhood, one is $1.6M all cash (not foreclosure), another one was $1M all cash (pretty much just for the land, the house is definitely a tear-down).

So my curiosity is, if I have $1.5M cash (not in gold, oil, stock etc., but idle cash) laying around, why would I be buying a house? A person with so much money should have long bought a house. Then if he is smart enough to amass several million, why would he NOT borrow? Borrowing at FHA rate is a no-brainer.

I guess my main question is, I acknowledge that there are plenty of loaded people out there looking for good deals in good areas, but I don't understand why they don't borrow when borrowing makes perfect financial sense. Will all-cash offers be looked upon more favorably compared to, say, 50% cash offer? I think not.

OO -- If the homes were sold as prime residences then I have a guess: Wealthy individuals whom I have known always buy their homes for cash and never have a mortgage, though there might be tax and liquidity advantages. The logic is that if everything goes wrong at least they will have a house and a roof over their heads.

Think about the people who took out mortgages so they could invest more with Bernie Madoff, Enron or WorldCom, etc., and you can understand such thinking....

oo,

The investors are back in full swing again. And FHA only covers around
$400K, and you have to pay 5% interest. If you borrow more, then
you obviously have to pay more interest. These investors have cash.
If they make 10% profit within a year, it is an outperforming investment.

This is a bad news for buyers as this will increase the price of housing.
Therefore I have a gut feeling the price of housing is about to rebound,
even though all the data point otherwise. I wish those guys burn
in hell for starting the first housing bubble in the first place. We should
boycott buying any properties from a flipper.

If I had 5 mil in cash, and wanted to buy a 1 mil house, I absolutely would pay all cash.

OurBroker says

Wealthy individuals whom I have known always buy their homes for cash and never have a mortgage, though there might be tax and liquidity advantages.

Certainly explains why San Diego to Beverly Hills, Ca RE prices tanked by 35-40% in early 90s.

Opps, there went the money!

sfbubblebuyer says

If I had 5 mil in cash, and wanted to buy a 1 mil house, I absolutely would pay all cash.

LOL! you more likely would leave SF and move to NV or FL, as many did! $1M will feed and house you and your family for 10-12 years without worring about working. Its a very different world on the other side.

OO says

Btw, I am curious who these cash buyers are?

I just heard about two transactions in my neighborhood, one is $1.6M all cash (not foreclosure), another one was $1M all cash (pretty much just for the land, the house is definitely a tear-down).

So my curiosity is, if I have $1.5M cash (not in gold, oil, stock etc., but idle cash) laying around, why would I be buying a house? A person with so much money should have long bought a house. Then if he is smart enough to amass several million, why would he NOT borrow? Borrowing at FHA rate is a no-brainer.

I guess my main question is, I acknowledge that there are plenty of loaded people out there looking for good deals in good areas, but I don’t understand why they don’t borrow when borrowing makes perfect financial sense. Will all-cash offers be looked upon more favorably compared to, say, 50% cash offer? I think not.

You are thinking it incorrectly.

If you are borrowing over 30 years you are paying someone interest rate. It's not free. Thats cash you are not investing and making money from.

As far as those 1.5 or 1 million sales.... rich people buy luxury, or builders buy land to speculate or build. One doesn't become a millionaire by giving away once fortune in exchange for a wooden box.

I understand that logic of paying cash for your primary residence.

But I am perplexed by the fact that these residences are by far NOT luxurious - you know what $1.6M can get you in west valley. Now if someone pays $2.5M cash for Portola Valley, or better still, $100M for Los Altos hills like the Russian dude, that I can understand perfectly. That $1.6M house is quite, well, underwhelming for the price tag.

If I have loads of idle cash (say $1.5M), that means my net worth is probably more than $10M, because what kind of wealthy person will be keeping USD cash nowadays? And if I have $10M, I assure you today's $1.5M house will be last item on the shopping list for me, hence my perplexity.

Yeah, I get it, April fools.

kc6zlv says

And how did that work out in the Soviet Union?

Good point! The Soviet Union failed because it did not let people keep the results of their own work. That system is exactly the opposite of what is being proposed here.
Land is not the result of anyone’s work. So land is exactly the right thing to tax. Not labor.
A land-value tax also has the practical advantage that you can’t hide land, and taxes paid are all public record. No one can evade the tax, except by corrupting the laws to get exemptions for themselves. Say, for example, by exempting everyone over 60 regardless of wealth…

Patrick,

The problem I have with it is that it has the potential to allow people to pay very little in taxes based on their income. Someone in another town where land is cheap could open a business making 50 million a year in revenue and pay the same taxes as someone making $30,000 a year with a home where the value of land is high.

And I don't have a problem with income taxes. I have a problem with the way the tax burden is distributed. I know $30,000 is far from a high income, but I think lower-income people should share some of the tax burden. Likewise, I can't see the argument that someone who is makes tens of millions a year and pays $500,000 in taxes isn't paying their share. Certainly someone making less should pay less, and someone making more should pay more, but I really don't think dinging someone $500,000 a year in taxes is fair.

Additionally, property taxes/land taxes (whatever you want to call them) don't allow any flexibility for people going through financial hardships. You have to pay that magic number regardless of your ability to pay. I would like to see a good portion of the tax burden shifted toward sales taxes on non-essential goods. I don't think it would reduce the amount of consumer spending where people have the money to buy DVD players or other junk, but it would still allow people the option to cut back spending if they are having financial difficulties.

And when it comes to all the talk about the need for more revenue, I disagree. The current budget negotiations at all levels of government around the country are good examples. The Federal Budget, for example, is more about cutting funding for domestic programs, which are much smaller than the foreign programs like the cost of military spending in the Middle East, foreign aid to countries that don't need it (Israel) and countries where no amount of money will solve anything (African countries). Likewise, in California politicians won't even acknowledge the $600 million a year Los Angeles County spends on various services for illegal immigrants, but they are concerned that college students aren't paying enough toward their education.

The real problems in this country aren't going to be solved because we, as a country, aren't willing to prioritize where we spend money.

they print dollars so that poor can trade labor in exchange for that magical green paper

Being rich is not = to being smart. Some people get good stock options at work, then invest all the money in the same company and wala turns out to be, say a google, or MSFT, or any number of winners, and all they did was get a good job. Not rocket science. Does not make them market sluth. I know many many smart rich people, who are THE SELLERS of homes, NOT buyers.

On a side note, I think the duck if offten wrong, at least about Real Estate NO doubt!

Could things be any more absurd? Yes, start a war with no purpose and no good guys in the fight.

So happy to see that some of the the best "investments" to be found are in shorting fraudsters who managed to get a public listing.

Go capitalism!

Hope those highly skilled CCME folk don't get penalized too bad for this, or they won't be able to contribute to society any more :(