Crazy RE - Redfin CEO Tweetstorm

[Koolau]

EXACTLY! People frequently do that for precisely the reason you mentioned, with the biggest "do later" being converting an unfinished basement to a finished one.

If you're building a house, it really does pay to understand how your taxes are going to work ahead of time - in mind numbing, nauseating detail. Or you could very easily get a pretty unpleasant surprise come tax time.

We just had neighbors move in from TN. I feel really bad for them, as their taxable valuation is reset to the state equalized value. That means for essentially the same type of house (square footage, trim, quality, etc) they had in TN, their property taxes are going from ~$2-3,000/yr to over $14,000 per year. They (oddly) don't seem that concerned about it as they're both still young and presumably pulling in some pretty good paychecks, but holy cow what a jump.

Like I said initially..websites like SmartAsset that think they can come up with lists of where property tax values are good and not so good are usually unaware of many of these details..and people making decisions off those lists can wind up with some pretty unpleasant surprises. Because it's not just the official millage rate that matters - but what house valuation you are paying taxes on to begin with. And even very similar houses in 2 different states can have WILDLY different taxable valuations.

This is where trusting your realtor to steer you correctly could be problematic. It's easy to look up tax records that say "Mr and Mrs X pay $2500/year in property taxes for the house you are looking at Mr and Mrs Y." If a realtor could actually follow "the property tax code" and calculate it properly: Would they? Letting someone know that the property taxes on their proposed purchase would suddenly reset from $2500 to $14,000 would be ethical, but it wouldn't help the realtor get a sale. Blissful ignorance by the realtor would perhaps be understandable if not moral but YMMV.

 

[ExFlyBoy5]

This is where trusting your realtor to steer you correctly could be problematic. It's easy to look up tax records that say "Mr and Mrs X pay $2500/year in property taxes for the house you are looking at Mr and Mrs Y." If a realtor could actually follow "the property tax code" and calculate it properly: Would they? Letting someone know that the property taxes on their proposed purchase would suddenly reset from $2500 to $14,000 would be ethical, but it wouldn't help the realtor get a sale. Blissful ignorance by the realtor would perhaps be understandable if not moral but YMMV.

Well, to be fair to the Realtor...many aren't equipped with the tools to accurately figure out the tax in the future. There are so many rules that complicate it (and can vary by county depending on where you are) and they may not know what a millage rate will be for the next tax year, let alone the value. Realtors can provide a service, but to expect them to help with EVERY SINGLE facet of a R/E deal isn't prudent and often isn't allowed under their E&O insurance carriers.

Not only that, in my DW's experience (she was a Realtor for many years), the buyers generally don't care about the taxes and as long as they are able to get the loan (which will also depend on CURRENT taxes) that's all they care about.

 

[Koolau]

Well, to be fair to the Realtor...many aren't equipped with the tools to accurately figure out the tax in the future. There are so many rules that complicate it (and can vary by county depending on where you are) and they may not know what a millage rate will be for the next tax year, let alone the value. Realtors can provide a service, but to expect them to help with EVERY SINGLE facet of a R/E deal isn't prudent and often isn't allowed under their E&O insurance carriers.

Not only that, in my DW's experience (she was a Realtor for many years), the buyers generally don't care about the taxes and as long as they are able to get the loan (which will also depend on CURRENT taxes) that's all they care about.

I agree with your basic premise that realtors can't be an expert on every facet of home purchase. Having said that, NOT alerting a potential buyer that the current tax-listings for the house they are considering will go up - WAY up would, in my opinion be a moral lapse or gross incompetence. It would be easy enough to look at the taxes paid on recent COMP sales. It would not be exact but would show that there could be an order of magnitude increase in property taxes. THAT would be a pretty good piece of information to have when considering the purchase of a house in another state IMHO. Of course, NOT revealing that or even suggesting that the prospective buyer "look it up for themselves" wouldn't be illegal. But for 6% of the sale price, I'd expect a bit more service than "sign here and here and here." YMMV

 

[24601NoMore]

Hopefully, buyers at least understand the very basics of how property taxes work in a given state.

I know for our own house search NOT to look at the property tax data listed in Zillow, Realtor.com, etc, as that's current and likely capped tax liability, but to hunt down the SEV and millage rate and do my own calculation as to what "future" taxes will be since I know taxable value resets to current SEV on close. I suspect "most" people know to do that here..but maybe I'm assuming too much ..

Then again, we also look at a lot of other variables, too - like is there a decent nearby hospital. That's a pretty important purchase criteria as we all get old. You'd be surprised how many otherwise nice locations don't have a decent hospital within half an hour. We just passed on an otherwise really nice house the other day because..no good hospitals within half an hour. Today, we're reasonably close to a couple of good ones.

 

[ExFlyBoy5]

I agree with your basic premise that realtors can't be an expert on every facet of home purchase. Having said that, NOT alerting a potential buyer that the current tax-listings for the house they are considering will go up - WAY up would, in my opinion be a moral lapse or gross incompetence. It would be easy enough to look at the taxes paid on recent COMP sales. It would not be exact but would show that there could be an order of magnitude increase in property taxes. THAT would be a pretty good piece of information to have when considering the purchase of a house in another state IMHO. Of course, NOT revealing that or even suggesting that the prospective buyer "look it up for themselves" wouldn't be illegal. But for 6% of the sale price, I'd expect a bit more service than "sign here and here and here." YMMV

And this is why I would guess that 98% of broker/buyer/seller agreements has a clause indemnifying the agent for knowledge items like tax liability.

Don't get me wrong, I am not a fan of the system as it stands. "Realtor" is nothing more than a trade group that lobbies HEAVILY to keep laws favorable to them and while they act as a friend to buyers/sellers they aren't...at least as far as I am concerned. The truth is that the only real protections for consumer comes from state laws. I am more than happy to see how some companies have come in and upset the status quo (such as Redfin).

 

[Koolau]

Hopefully, buyers at least understand the very basics of how property taxes work in a given state.

I know for our own house search NOT to look at the property tax data listed in Zillow, Realtor.com, etc, as that's current and likely capped tax liability, but to hunt down the SEV and millage rate and do my own calculation as to what "future" taxes will be since I know taxable value resets to current SEV on close. I suspect "most" people know to do that here..but maybe I'm assuming too much ..

Then again, we also look at a lot of other variables, too - like is there a decent nearby hospital. That's a pretty important purchase criteria as we all get old. You'd be surprised how many otherwise nice locations don't have a decent hospital within half an hour. We just passed on an otherwise really nice house the other day because..no good hospitals within half an hour. Today, we're reasonably close to a couple of good ones.

I think it very much depends upon what folks have gotten used to in their home state. Most folks can say with "confidence" that their taxes are based on (let's say) assessed valuation. With that in mind, if the state they are looking at says "our RE taxes are based on 'assessed valuation'" I would ask - is that like "sale price" or is that some "multiple/fraction of sale price?" Honestly, it wouldn't occur to me that you have to go back to the drawing board to figure it. AND I'd expect my well-compensated realtor to at least give me a clue about the intricacies of my newly adopted state's "gotchas."

Folks too - rightly or wrongly - wisely or unwisely - depend on folks like Zillow for at least SOME level of accuracy and transparency. I've figured out that neither is true, but that's 'cause DW spends hours on their site and cries "BS" every 5 minutes (I'm exaggerating - not the time frame, but the use of the term "BS")

Heh, heh, back in the day, our realtor never "warned" us that we'd be saving a bundle on our RE taxes AND State income taxes! She just said "this is what the current folks pay and it always goes up a little bit as valuation goes up." We couldn't figure it out exactly as the internet didn't exist back in the day - so it was a pleasant surprise. Now, it's "out there" but so obtuse that figuring something without help is problematic. SO, once again, if I pay for a realtor, I'd like to be able to depend on one to at least get me close on such things - and YES I NOW know to ASK the question but YMMV.

 

[RetireeRobert]

"Realtor" is nothing more than a trade group that lobbies HEAVILY to keep laws favorable to them and while they act as a friend to buyers/sellers they aren't...at least as far as I am concerned. The truth is that the only real protections for consumer comes from state laws.

Speaking of some degree of disappointment with Realtors, I went to an open house a few days ago. I asked agent hosting what kind of stone the kitchen counters were---granite, or quartz, or Corian, or what? They were clearly "stone", that much I could tell.

Hosting agent looked at listing, did not find info, so he said he would find out that answer from listing agent and email me the answer. That evening the email answer came: counter was "laminated Formica".

This is the level of professionalism realtors are asking 6% for on several hundred thousand dollar transactions.

 

[pjigar]

I always joke that if you can't be good at anything then try becoming a realtor! I am sure there are some good ones but almost everyone I have worked has been lack luster. I still use them but their job is just to give me forms and run comps for me. I run the whole show.

 

[RetireeRobert]

I always joke that if you can't be good at anything then try becoming a realtor! I am sure there are some good ones but almost everyone I have worked has been lack luster. I still use them but their job is just to give me forms and run comps for me. I run the whole show.

Pretty much have to run the show to protect oneself. Last house we sold I interviewed three agents and got comparative market analyses from each. I set the sales price, and we got full price and house sold in two weeks---this was in 2013.

One of the realtors contacted me about three months later after our transaction had closed, and wanted us to list with her, and was kind of indignant I had not been responding to her meanwhile. Like if I got a CMA from her I was obligated to list with her. That realtor had suggested listing for a price $28,000 lower and insisted that would be pushing it to try for even that much! She was so surprised when I told her the house was already sold, at full price $28,000 more than she suggested, and the deal was done and finished, and the money was in our pockets. She couldn't believe it. Some of those people are arrogant in their non-professionalism.

 

[Koolau]

Sorry, I didn't mean to turn this into a "dump on realtors" thread. Both realtors we used here in the Islands were Top Notch and helped us navigate the issues of Hawaii which are much different than our home state.

Back in our home state, the realtor involved in our first purchase helped us navigate a potentially devastating error that a SURVEYOR had made 2 years earlier. We bought a house that wasn't on the land we purchased - because the surveyor screwed up. Our realtor stepped in (those 2 years later) and forced the surveyor to redo all the work. The realtor figured a way to undo and then redo the sale - passing a dollar bill back and forth - it was one for the ages! When the surveyor had the gall to bill us, the realtor politely offered to ruin his reputation all over town! It was a thing of beauty.

On the limited topic of real estate taxes and their various "intricacies" I simply wanted to imply that Realtors should be "UP" on such things and help clients figure "about" what their costs will be. I don't think that is too much to expect for the money. Other than that, I'm sure we have horror stories about all the professions we deal with as YMMV.

 

[Retch The Grate]

I think most would agree that $9K+ on a not that "fancy" of a house in INSANE, and a big impediment to ER.

Nope, I consider it one of my expenses that I need to plan for like health insurance and food and transportation and entertainment and whatnot. Property tax by itself doesn't even come close to what I budget for food for instance.

 

[harley]

Speaking of some degree of disappointment with Realtors, I went to an open house a few days ago. I asked agent hosting what kind of stone the kitchen counters were---granite, or quartz, or Corian, or what? They were clearly "stone", that much I could tell.

Hosting agent looked at listing, did not find info, so he said he would find out that answer from listing agent and email me the answer. That evening the email answer came: counter was "laminated Formica".

This is the level of professionalism realtors are asking 6% for on several hundred thousand dollar transactions.

During busy times (like now), it's very unusual for an actual experienced realtor to be sitting at an open house. IME, most of the "realtors" that sit at the open house are the low person on the totem pole in an office. They seldom even read about the house they are in, and are pretty useless as far as making a sale. Open houses are mostly just an opportunity for other realtors to check the property out.

 

[ExFlyBoy5]

Sorry, I didn't mean to turn this into a "dump on realtors" thread. Both realtors we used here in the Islands were Top Notch and helped us navigate the issues of Hawaii which are much different than our home state.

Back in our home state, the realtor involved in our first purchase helped us navigate a potentially devastating error that a SURVEYOR had made 2 years earlier. We bought a house that wasn't on the land we purchased - because the surveyor screwed up. Our realtor stepped in (those 2 years later) and forced the surveyor to redo all the work. The realtor figured a way to undo and then redo the sale - passing a dollar bill back and forth - it was one for the ages! When the surveyor had the gall to bill us, the realtor politely offered to ruin his reputation all over town! It was a thing of beauty.

On the limited topic of real estate taxes and their various "intricacies" I simply wanted to imply that Realtors should be "UP" on such things and help clients figure "about" what their costs will be. I don't think that is too much to expect for the money. Other than that, I'm sure we have horror stories about all the professions we deal with as YMMV.

And your post is a great example to show that there are good and bad with most professions. Be it Realtors (or sales agents), attorneys, physicians, well...you get the point.

 

[ExFlyBoy5]

During busy times (like now), it's very unusual for an actual experienced realtor to be sitting at an open house. IME, most of the "realtors" that sit at the open house are the low person on the totem pole in an office. They seldom even read about the house they are in, and are pretty useless as far as making a sale. Open houses are mostly just an opportunity for other realtors to check the property out.

This. My DW has done 3 open houses in her almost 20 year career. All of them in the first 3 months of business. She used them to find clients that weren't represented.

 

[Out of Steam]

Doubtful. Aside from the noisy data, at ~1M/year legal immigration seems to still be near a high point except for the turn-of-the-last-century Ellis Island days.

https://www.migrationpolicy.org/pro...Annual-Number-of-US-Legal-Permanent-Residents

I would guess that 2020 will be a bust due to Covid restrictions.

Permanent residents make up only one part of the number of legal immigrant workers coming to the US, and even this modest reduction is an accumulated 300K workers not in the labor force. With the retirement of baby boomers, immigration probably would have grown by that number in the same period.

 

[Koolau]

During busy times (like now), it's very unusual for an actual experienced realtor to be sitting at an open house. IME, most of the "realtors" that sit at the open house are the low person on the totem pole in an office. They seldom even read about the house they are in, and are pretty useless as far as making a sale. Open houses are mostly just an opportunity for other realtors to check the property out.

You may be correct in general, but we found our Hawaii realtor AT an open house. She was knowledgeable about the house she was tending. She was knowledgeable about the market. She knew what questions to ask us (what exactly are you looking for in terms of price, location, view, amenities, size, willingness to rehab, #BR/Baths, etc. and where are you now, what did you pay/when, what condition is it, how much can you put down, how are your finances, what is your credit rating, on and on ?) Then, she alerted us to a "trick" that we did not know (maybe true in other states as well): Hawaii has open houses every Sunday BUT virtually every property ALSO has a Thursday open house for realtors. The public is NOT excluded from these, but they ARE to familiarize realtors with the properties in the MLS books.

This realtor gave us her card but didn't apply any pressure to choose her. As we began visiting Sunday AND Thursday open houses (doubled the places we could see in a week) her name would come up. EVERY realtor we met knew her by name and reputation. They couldn't help themselves complimenting her ethics and abilities. Guess who we chose as our buying agent and later selling agent? YMMV as always.

 

[RetireeRobert]

Y
This realtor gave us her card but didn't apply any pressure to choose her. As we began visiting Sunday AND Thursday open houses (doubled the places we could see in a week) her name would come up. EVERY realtor we met knew her by name and reputation.

This could have been posted in the "Amazing Coincidences" thread!

Of course, on one particular island, in one particular city, what are the chances most realtors would not know the other realtors on that same particular island and particular city?

 

[Koolau]

This could have been posted in the "Amazing Coincidences" thread!

Of course, on one particular island, in one particular city, what are the chances most realtors would not know the other realtors on that same particular island and particular city?

Point well taken though there ARE 100s of agents here spread across 600 square miles. It's just that we found "competitors" almost gushing over this particular agent. We were impressed. YMMV

 

[dirt_dobber]

1,500 Austin homes sold for $100K over asking price since Jan. 1
https://www.kxan.com/news/local/austin/1500-austin-homes-sold-for-100k-over-asking-price-since-jan-1/

It is VERY often that homes on the West side of Austin to go on the Market on
a Thursday and state that "All offers are due on Monday".
My son sold his 3 bedroom home 1 month ago to a retired couple from Colorado who never set foot in the house and made an ALL CASH offer @ $86k over asking price.
He brought the home for $326k - 8 years ago and sold it for $675k

 

[Koolau]

1,500 Austin homes sold for $100K over asking price since Jan. 1
https://www.kxan.com/news/local/austin/1500-austin-homes-sold-for-100k-over-asking-price-since-jan-1/

It is VERY often that homes on the West side of Austin to go on the Market on
a Thursday and state that "All offers are due on Monday".
My son sold his 3 bedroom home 1 month ago to a retired couple from Colorado who never set foot in the house and made an ALL CASH offer @ $86k over asking price.
He brought the home for $326k - 8 years ago and sold it for $675k

Yeah home prices in our old home city have roughly doubled in the past year. Crazy. Prices are up locally in Hawaii, but not nearly to the extent others are mentioning. I guess our prices are always "crazy" so how much more can they go up? YMMV

 

[harley]

Since we have been considering selling our FL home we had a couple of different agents check the place out and give us their guess at a price based on comps. We got $360K and $375K, which is more than I was expecting. That was about 10 days ago. DW was just checking listings herself for comps in our neighborhood, and couldn't find anything similar to ours under $400K. It's getting pretty crazy out there. I know those are listing prices, but it sounds like they're selling at or above listing. We're not selling any time soon, so we might miss the crazy times, but unless there's a big dip as opposed to a slowing market our house will give us a nice profit when we're ready.

 

[Perryinva]

The Wallethub article was amusing, for the reasons listed. One can only compare similar states. Based on the article CA is cheaper to live in than WV!

 

[Tuirc]

I don't have a crystal ball but "any" chart always reverts to its mean. I don't know how that happens but it has always happened. Specifically for RE, biggest risk I see is the mortgage rate. In light of recent inflation fears, federal reserve may have to raise the interest rate sooner rather than later. RE prices has to come down significantly to make them affordable at a higher mortgage rate.

PS: Lower part of K will eventually pose new kind of problems for the country that no one can foresee. Again I don't know what is going to be the end result but everything is going the wrong way for the lower K.

This is a good point about everything going the wrong way for the lower part of the "K" and it is a real question what they'll do about it especially after last year. We do have political movements that are not above taking advantage of their energy and disaffectedness for their own advantage.

That's one small part of my calculus that led to me selling my current house in the DC suburbs (exurbs really ~40 miles away) to relocate to a rented house in a tier 2 city. That plan sees me retired in < 2 years followed by a move to Europe for a few years of site-seeing and experiencing new cultures. In the back of my mind it also has me avoiding physical violence that may be coming for extended periods of time in the US. Europe may be socialist, but they are fairly settled socialist. America is on the verge of "becoming" and nobody can predict what that will look like once it gets rolling.

 

[Tuirc]

1,500 Austin homes sold for $100K over asking price since Jan. 1
https://www.kxan.com/news/local/austin/1500-austin-homes-sold-for-100k-over-asking-price-since-jan-1/

It is VERY often that homes on the West side of Austin to go on the Market on
a Thursday and state that "All offers are due on Monday".
My son sold his 3 bedroom home 1 month ago to a retired couple from Colorado who never set foot in the house and made an ALL CASH offer @ $86k over asking price.
He brought the home for $326k - 8 years ago and sold it for $675k

While selling is like that in the closer in counties in Northern Virginia (meaning closer to DC), the stories of houses selling for $100-$200k over asking or more, are on everyone's lips, that seems to be reserved for mostly Arlington and Fairfax. Out in Prince William my experience is that the market is a bit softer. We have a house I bought 18 years ago on the 18th fairway in a gated community for $378k. I just put $50k into it upgrading some of the features of the house and removing negatives. Our initial idea was to put it on the market for $610k (reasonably supported by the market). 40 days later after all the work was done, we reevaluated and bumped the go to market price to $629k. (This house was worth ~$525k during the height of the bubble). We put it on the market on Thursday. We had an offer that day for $650k no appraisal, no contingency. We did not respond because we had a full backlog of people wanting a showing during the weekend. We ended up with 6 offers (we closed bidding Sunday night). We ended up going with a couple downsizing from Fairfax after selling their > $1 Million house to put $250k down on ours. No appraisal, no contingency for $651,000 (their bid included an escalation clause up to $654k max.

So, the house did sell fast. I did have multiple offers. I did have no contingency and no appraisal. But I didn't see the price run up that some of the other areas are seeing. Still quite happy though. We move next week.

 

[Tuirc]

On a legal forum I am on, there are a lot of mid sized firms that are learning the hard way that people are GOING TO WORK FROM HOME and it's not up for negotiation. A fella I went to law school with had 3 paralegals/assistants QUIT when they were told they would have to go back to the office. Some of the larger firms have decided that they will allow many of the "non attorney" employees chose if they want to work from home or at the office.

Interesting info. I work for a large cap multinational real estate information company. So, you can imagine the push to get into the office is strong since that what we "sell." We have pent up turnover from the pandemic, but even so, we're still running high at about ~20% instead of ~8%. A significant part of it is a no flexibility 5 days in the office requirement. Telework is not even an option. Our corp response is simply to replace those people. We began hiring before the policy was announced to replace the expected >10% of the people we figured would want to leave. That was widely considered by managers to be a down payment on what the and number would be.

That said, there is a rumor that once we get people back in the office and we're running ~50% right now, we may see an easing of this requirement on the tech side of the house, but not the rest of the company.