Detroit Real Estate

I received this email today and thought it was worth sharing because so many homeowners and Metro Detroit home buyer's do not know this.

WDIV's Rod Meloni Interviews Local Mortgage Expert, Brenda Brosnan! ANOTHER PLUG FOR OUR MARKET!!

When Rod Meloni called last week and drove out to her office, he wanted to know about the impact of tax assessments and the effect on appraised values. Don't you just love it when a seller says "well, my assessed value says $150,000 so my house is worth $300,000" when it's really worth $200,000? So last week when she had another great opportunity to educate consumers on Wednesday's 5 o'clock news, Brenda made it crystal clear that an assessment does NOT dictate what your home is worth!

She also made it crystal clear that we are NOW in a different market and that buyers need to STOP expecting to "get a deal" when writing an offer on a great home! Brenda explained that inventory is VERY LOW and that houses are going for above asking price and if buyers were serious about getting an offer accepted, they needed to have this mindset.

If anything - these little market updates, might help us get more deals TOGETHER! Hopefully one of your buyers saw the 2 minute snippet!

                                                                 Brenda Brosnan

248.334.9400

brendab@goldenmc.com

                                                          Summit Funding, Inc.

 I can see why I get phone calls about taxes because of all the mis-information out there.  Even one of my mortgage lenders is putting out so-so information. 

Last year I referred a client to a mortgage broker that did Rural Housing Loans.  The mortgage loan officer did a good job working through all the issues and got the loan closed on time.  They did what they said they would do.  But what is nice is that they try to help the client out even after they close the loan.  The mortgage loan officer has a good email followup program.  But recently they sent out an email that was full of mis-information.  I am going to split it up in a few different blogs because of all the mis information.  Here is the opening paragraph.

""As a part of our ongoing customer service, mr Real estate agent  and ourselves here at xxxxx Mortgage are providing you with a Glossary of Common Tax Terms.  We are doing this to help you better understand your property taxes.  Please always remember that if you pay your taxes through an Escrow Account on your mortgage to always make sure that if you see a major change in your tax bill that you notify your mortgage company so that they collect the correct amount for escrow.  If you pay too little into escrow that will create a situation where the mortgage company will eventually be sending you a bill to eliminate the deficiency.  Understanding your taxes is one step toward managing your escrow account correctly."" 

Unfortunately if you call your mortgage company, and tell them that there has been a change in your taxes.  I doubt they will do anything.  The way your mortgage company works is they do a review of all escrow accounts that they handle once or twice a year.  They don't have time to do it manually each time somebody calls in.

Escrow accounts are regulated by a formula that all lenders use, so there is not too much money or too little money in an escrow account.  What happens is that the lender collects the same escrow amount each month until they do their escrow review.  They just can't change the escrow amount they collect until they do the review. 

Unfortunately the lenders are can't figure out the escrow account changes until after the change.  Sometimes they are behind six months.  So yes you do sometimes get a bill for the deficiency or a check for the overage. 

Because whether you understand your taxes or not, you don't manage your escrow account.  Your lender manages your escrow account!  They aren't trying to cheat you out of money, they are just following the same formula for every mortgage account they handle.  The system works.  Maybe not perfectly, but it protects you from having way too little or way too much money in your escrow account.

I received this email from an reader of one of my blogs surfer that lives in Farmington Michigan and wants to know about appealing Michigan Property taxes and how to do it right.  It is a great question that many people ask about about.  Many Michigan property tax protesters sometimes get upset and go about the process all wrong.  So don't go down this path and get your appeal denied.  But here is their question:

I was reading information on your website and wondered if any of the following information matters:

• My SEV is approximately $300K.
• My neighbors all of whom have homes that if sold would go for a higher price than mine, have SEVs of ranging from $150K - $250K.

 Is it worth mentioning that my neighbors have lower SEVs (yet higher actual market values), or is this irrelevant to my case?  2 of them completely remodeled and another has been in the area for more about 15 years.  Perhaps that is why their SEVs are so much less.

Here is my answer.

In order to win your appeal of your Michigan Property tax appeal you have to play by the rules the tax review board sets.  Have you ever been in an argument with somebody and they go off on a tangent.  They get so ridiculous in what they are talking about that it that their argument becomes baseless.  That is the same idea if you go in and talk about your neighbors SEV.  Your argument becomes irrelevant and baseless.  

What your neighbors have as SEVmeans nothing.  What your neighbors SEV has nothing to do with your SEV.  The only item that matters to the tax review board and the assessor is the comps that fall within the dates they are looking at.  Usually the dates they want the sold comparables from  are October 1, 2009 - September 30, 2010.  They will be looking at homes that similar in size, shape, and age.  They will use comparables from your neighborhood first, and then other similar neighborhoods. 

If you bring up their SEV it just makes you look ignorant in their eyes.  You can't argue that point because all they care about is current market value to determine SEV for your home.  And they determine current market value by taking a snapshot of homes of similar style, size, age in an area close to your home. (It doesn't matter what homes sold for in another city, or what your neighbors SEV is)

So when you go to appeal your Michigan property taxes at your local Michigan tax review board bring written proof of homes that sold like yours during the dates they want.  Be nice, be professional, and present your case.  You will at least make a good case for reducing your taxes. 

I hope this helps.  

 You can't believe everything you get in an email even if it is from a professional in the industry.  I recieved this from a mortgage guy I know.  Sometimes questions are not fully explained and can lead to mis-information.

Here are the most commonly called in "tax questions" to our office

Appeal by Letter: You may appeal your property assessment to the local Board of Review in person (by appointment) or by letter. The Board of Review meets the third Monday in March each year for the purpose of considering appeals.

Yes you can appeal your taxes by letter or in person.  But every local community meets at different times.  Some start as early as the first week in March and some even meet in February.  Call your city or township and ask when your tax review board meets.  Call and set up an appointment.

Assessed Value: By State Statute, this is fifty percent (50%) of market value.

Board of Review: A local board comprised of property owners that meets annually for the purpose of hearing appeals on the assessed value of property.

 The Board of Review section does not fully explain how it is made up.   Here is how Northville Township does it.  The members of the Board of Review are volunteers from your neighborhood who review the assessment roll on behalf of Northville residents. The size, composition, and manner of appointment of the Board of Review is prescribed by the City Charter. Three qualified and registered electors of the city are appointed by the City Council. These members shall not be City officials or employees or candidates for elective City office. The Board members serve on alternate three-year terms. The Council is responsible to assign the compensation of the members of the board.

The Board of Review is set up by each community's rules.  Sometimes there are attorneys, (tax attorneys) or even real estate agents on the board.  Many times they are appointed.

I hope this explains these tax questions a little better.

So you are buying a home with non homesteaded taxes and you want to know how Michigan property taxes work.  How long do you have to pay non-homesteaded taxes?  When do non-homesteaded taxes become homesteaded taxes?  What time of the year does that happen?  How did this come up as a blog? 

I had a Redford home buyer tell me today that her husband  told her if she bought a house that had non-homesteaded taxes that it would always be non-homesteaded taxes forever.  They didn't want to look at Redford homes with non-homesteaded Michigan taxes because they thought they would forever be paying higher property taxes.  So all this time they have been crossing off Redford home listings just because they have non homesteaded taxes.

That's not the way it works.  A Metro Detroit home becomes non-homesteaded if the property owner does not claim it as their primary residence and claim a homestead exemption.

Examples of when a property is non-homesteaded are:

• a bank foreclosure
• a home that the owner has died
• a home that the owner has moved out of state or out of the country
• a home that is a rental property
• a home that is owned by somebody that has another home with a homestead exemption
• a second home
• a vacation home

City adminisatories only change a home's property tax status from non homestead taxes to homesteaded on May 1.  So if you buy a bank foreclosure on June 30 you will have to pay the higher non homesteaded tax rate until next year.  On May 1 it would change to homesteaded taxes if you filed the homestead exemption with the city prior to May 1.

So I hope this explanation about Michigan property taxes did explain more about homestead and non-homesteaded taxes.  So you can look and buy a home with non-homesteaded property taxes.  If you file your homestead tax exemption you will be paying the lower taxes after May 1 rolls around.

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