Question (CA): First off I would like to thank you both for your Q/A column on Realty Times. We've found it very useful and informative.
We sold property in California and we are planning to relocate in Texas. We have found property we like, but Texas' high real estate tax is holding back our final decision to the point of considering bypassing Texas altogether. That would be a shame for we like Texas.
What do you all see in the near future regarding real estate taxes in TX? Is there any chance of a real estate property tax reduction similar to Prop-13 in California where we only pay 1 percent of the sale price (market value) of the property? It is no small wonder Texas shows one of the lower R/E ownership ratios in the nation.
We could probably pay cash for the property we are looking for. Is paying cash a good idea? We are both retired on fixed income and our money in the bank is losing buying power to inflation and taxes.
Answer: Answering your questions regarding Texas taxes and overall real estate ownership is a difficult if not impossible task because the Texas Legislature is still, after several Special Legislative Sessions, attempting to come up with a viable and lawful method of funding the state's deficit as well as providing the state's needs for educating our youths. However, one of the reasons our property taxes are so high is that Texas does not have a state income tax. The U.S. Census Bureau's estimated percent of home ownership for 2003 in Texas is 64.5 percent ranking 45th in the U.S. That compares to California's 58.9 percent ranking 48th in the U.S. The estimated percentage of home ownership for 2003 in all states combined is 68.3 percent.
The Texas Association of REALTORS® publishes a consumer website that links to "Important issues for Texas homeowners." One can access a lot of useful and informative data regarding owning a home in Texas.
As for whether or not paying all cash is a good idea or not, you should consult a professional tax advisor who can view your entire financial picture. Other than that, paying all cash gives one the peace of mind of avoiding the strain of making monthly mortgage payments on the monthly cash flow associated with a fixed income.
Question (FL): I will be moving to Texas in 2006. I am now an active Florida Licensee. What will I need to do in order to become licensed in Texas?
Answer: Unfortunately, Texas does not have license reciprocity with any other state. See the Texas Real Estate Commission's site dealing with reciprocity. The requirements are detailed on the left hand navigation bar under "Applications, Requirements."
Question (MD): I recently went to a settlement to refinance my home. The Title Company secured a payoff figure from my mortgage company. We were told on Sep 26, the date of settlement, we would not have to make an October house payment. On October 1st, my mortgage company withdrew from my checking account the Oct house payment as they had done every month I have lived in my house.
When I called to retrieve this money I was told that it was for September interest. They said they only owed me my monies held in escrow.
My title company said that what they are really sending me is this payment back and not escrow money. I thought when a payoff figure was secured for settlement, that is what you owed and it included all interest and other fees. Our payoff figure was supposed to be good until September 30. The mortgage company did not process the loan payoff until Oct 4. I have not yet been able to get this payment returned. Who is at fault and what can I do?
Answer: The payoff figure received by the Title Company should include all applicable fees including, without limitation, your September interest. To clarify, the title company should have paid the prior lender (even if it is the same lender), accruing interest through the payoff date. Assuming your new payment date is November 1st then your November payment should be comprised of interest for October and principal for November.
Contact your lender again, but speak with your loan officer's supervisor. If you don't receive an acceptable answer that makes sense to you, ask to speak with the supervisor's boss. If you still do not receive an acceptable response, then file a complaint with the Maryland Commissioner of Financial Regulation.
Question (OR): I have entered into an agreement to purchase a condo unit. Closing is in 3 weeks, but I have found difficulty in obtaining financing because of the 60 units, 30 are owner-occupied and 30 are investment rentals. It seems that no bank or lender wants to offer a conventional 30-year fixed rate mortgage (I'm putting 20 percent down) because the owner to rental ratio is less than 70/30. My credit score is over 775 and the best I am offered is an ARM. Can you comment on this practice or offer any suggestions for getting a conventional loan?
I have gone with traditional banks but I am now using different mortgage brokers. Some brokers are not able to offer a loan, and some are but with slightly higher interest rates.
Answer: The difficulty you are encountering has to do with the secondary mortgage market and not with your personal qualifications. Secondary mortgage lenders such as FNMA ("Fannie MAE") and FHMLC (Freddie MAC") have rules by which they must abide in order to purchase and "securitize" individual mortgage loans from primary lenders (banks and mortgage companies) which they sell to investors in million-dollar blocks. It is the 70/30 rule that is preventing your condo association with 50 percent owner occupied and 50 percent investor owned properties from qualifying.
Freddie MAC (FHMLC), I'm told, will make loans that Fannie MAE won't as it is not as rigid with its rules, and some lenders will make "portfolio loans" where the individual's credit worthiness and ability to repay is the primary consideration instead of a sale on the secondary mortgage market. When you use a mortgage broker, you open up all these other possibilities, whereas a single bank or mortgage source is limited to only those lenders with which the bank has direct or indirect affiliations.
Question (PA): I recently just signed a 6-month contract with a real estate agent to look for houses. I am planning to stay in PA, and hope to move in the spring 2006. My agent cautioned me against looking at any houses without him. He told me that there is a law that states that if I set foot inside a house without him, that I will be unrepresented from ever purchasing that home, even if I later return with him. Is this true?
Answer: No, that is not an entirely accurate statement from your real estate agent. We suggest that you might ask him to cite the Chapter and Subchapter of the Pennsylvania Code so you can look it up yourself.
We are assuming since you referenced a six-month agreement with the agent, that the agent represents you under buyer agency (see the PA code section 35.336 for the form of the Consumer Notice).
There could be a "procuring cause" legal issue, however, if you called another real estate agent to gain access to view a home, but failed to inform that agent that you were already represented by another real estate firm. Agents, even listing agents, are not eager to spend their time, money, and other resources showing property (even their own listings) to a consumer who is represented by a different firm.
In fact, a listing broker is unlikely to show property to a consumer who is represented by an agent without that agent being present. It keeps the professionalism on a much higher plane. Consumers, however, learn this fact very quickly, so in an effort to conserve the consumer's time the consumer may purposely fail to disclose that he or she is already represented by another agent. This can create major problems for the real estate agents of both firms.
The bottom line: You hired the agent to represent your interests, so why not let him do it? If you are experiencing an inattention to details, or an unwillingness to find a suitable property for you, or any other agent failure to adequately discharge his agent functions as are required by law, communicate with him and let him know that.
