  Lobsterpots Member Username: Lobsterpots Post Number: 70 Registered: 06-2007 |
DougW: How does one get "locked in" at the low property tax assessment. They tax me on my purchase price? | ||
Bostonedisonrocks Member Username: Bostonedisonrocks Post Number: 17 Registered: 03-2007 |
Lobsterpots -- DougW is correct. If you buy a fixer-upper at a low sale price -- let's say $60,000 - the State Equalized Value (SEV) will hopefully be 1/2 that - or $30,000. Your taxes are based on the SEV - and cannot increase more than 4% (I think) or the Rate of Inflation - which ever is lower. Thus - you are locked in at a low rate. Now the only problem you may encounter, the assessed value on the tax roles my be higher than the amt you are paying for the home. It was probably assessed when occupied and in better shape. If this is the case, I would think you'd have a good argument to have the assessment lowered. I am not well-versed in this process, but I know it is possible. As for the boarding up of foreclosed properties in B-E -- the purpose is to secure the properties. Unfortunately, when a home is foreclosed, whoever is hired or responsible for cleaning out the house also tears down all window treatments. Thus, the house is obviously unoccupied and is an invitation to those unscrupulous types. Some of the boarded homes in B-E are actually homes that were foreclosed and already purchased by someone. I know of a person or two who have purchased a number of foreclosed properties...as investments for the future. I guess they know a good deal when they see one. There are some real deals for folks who have the energy, money and knowledge to do some of the rehab themselves. With some cash and sweat you will have a house like no other. I encourage people who fit into this category to seriously consider B-E fixer-uppers. For those who don't have those skills - there are many more homes for sale that need much less work. They are still priced to sell. Take a drive thru B-E - it is difficult to find two roof lines that are the same. This is a neighborhood of unique homes and unique architecture...unlike the new suburban neighborhoods where there may be 5 different models - repeated over and over again -- can you say "boring". | ||
Dougw Member Username: Dougw Post Number: 1913 Registered: 11-2003 |
Michigan passed a tax law in the 90's called Proposal A, which caps your year-to-year property tax increases at 5% or the rate of inflation, whichever is lower. So, you automatically get "locked in" after your purchase your house. The only trick is that if you pay less for the house than what the assessor says it's worth (which is highly likely in today's down market), you need to contest your assessment right after you purchase the house in order to get it lowered to the purchase price. This process can be a pain, as your request may be rejected at the local level, but then when you appeal at the state level, it will always be approved, assuming you can show that you paid fair market value for your house. (Which is only fair, you basically just have to show that it was on the market for a while at that price, and that your brother didn't sell it to you at some huge discount.) So it can be a hassle but it's worth it. One other catch, you will not qualify for the NEZ discount if the house is not your primary residence. (i.e. if it's a vacation home or rental) | ||
Lobsterpots Member Username: Lobsterpots Post Number: 71 Registered: 06-2007 |
I want to buy and fix one of these homes. I dont want to move in and be living in a house with falling plaster and peeling paint. Do I have to wait until the assessor comes out and checks the damage before I remodel? Sounds like alot a slow process with lots of red tape. | ||
Lefty2 Member Username: Lefty2 Post Number: 220 Registered: 07-2007 |
Check out the taxes before you buy! This state does not allow the assessed value to be the purchase price, WHICH it should be........... If you contest taxes, you are almost assured you will lose the appeal, they just want the money. ALSO please take an inspector to any house to determine how much it will take to make it to 'code' | ||
Lobsterpots Member Username: Lobsterpots Post Number: 72 Registered: 06-2007 |
So If I buy a house that was once taxed on $200k value, but over the years fell into disrepair and went through foreclosure, and I ended up purchasing it for say $100k, I would STILL have to pay taxes based on the $200k valuation? This is what I understood it to be. | ||
Lobsterpots Member Username: Lobsterpots Post Number: 73 Registered: 06-2007 |
I spoke with the tax assessors office. I was referred to the engineering department. When Boston-Edison homes were new, they were assessed on cubic feet, instead of square footage. Due to the high ceilings, a massive number is generated. With the current computer system, this number is converted to square footage, so the first assessment notice will be massive. I was advised if I purchase to dispute the first statement with assessors office between Feb 1-14 to dispute the square footage amount, and have it properly converted to square feet. I was told that an average home in BE, REGARDLESS of condition and sales price, will be assessed at between $250-300k, generating an estimated annual tax bill of around $12,000, using the homestead rate. Then, she told me to apply for an NEZ from Sept 1, to Oct. 1, and that should reduce my tax bill for the following year to around $10,000.00 ("UP TO" 35 percent off. as there's no guarantee the bill will be reduced by 35%. Lets say for instance that I buy the home for $100k, and spend $50k in repairs to make it liveable, (roof,heating sys, plaster and paint etc), nothing fancy here, no granite counters and chef's kitchen...then factor in the cost of heating, water and sewer,and a small mortgage at the best fixed rate, From a business point of view, it does not make any economic sense and there is no cash left for routine home upkeep, thats probably the reason why there has been some comments that BE is looking sort of shabby. With real estate prices continuing to decline, coupled with a massive tax and other carrying costs, even if I got a killer deal and paid cash for the house, it still wouldn't be economically feasible. Sorry to say, it's financial suicide. There should be more of an incentive and affordable options to attract buyers to this lovely district. | ||
Sknutson Member Username: Sknutson Post Number: 946 Registered: 03-2004 |
I certainly have no experience with this, but I cannot imagine that one cannot get a lower assessment given the realities of today's market. (I also realize that it might be hassle to do). With so many homes languishing on the market, the values have obviously fallen. Is who on here has actually gone through this process? Lobster: have you discussed this issue with a reputable real estate agent? | ||
Lobsterpots Member Username: Lobsterpots Post Number: 74 Registered: 06-2007 |
I'm working with a realtor, and he seems pretty good. I've been looking at several homes for awhile now, and I have it narrowed down to four. I'd love to do a rehab project, and I have plenty of time to do it one room at a time. Seems to me like it’s been nothing but stumbling blocks through the whole process. Allow me to elaborate... Take for example the mortgage. I'm pre approved for a decent dollar amount, with a good down payment. But the properties that fit into my budget will not pass the banks appraisal as they are in too much disrepair. Seems as though banks don't want to lend money in Detroit, a major deal breaker is the appraisal report that comes back with the box checked off "Declining area", which translates to Declined loan. Even with excellent credit. The tax rates that are listed in the realtor’s listings are often wrong, reflecting amounts that previous owners have paid, these amounts reset to the sky high values we're talking about once papers are passed to the new owners. From what I'm finding, the NEZ takes over one calendar year to be approved, and it's the "up to" 35% reduction. There’s no way of defining what the discounted tax amount will be at the time you purchase your BE beauty. I'm not the fighting type, and I learned long ago that you can't fight city hall. They've got it in their heads that these homes are worth between $250-300k plus, regardless of current market conditions and condition of the subject property. Another thing is the ACR City of Detroit compliance report which one has to sign prior to closing on one of these fixer uppers. The contract demands that the home be repaired to code within six months in order to get a certificate of occupancy. I don't want to be pressured into running out and do all of the repairs that they demand within six months, one of the reports that I got my hands on is filled with very frivolous items. If there is fallen plaster in an upstairs bedroom that I am currently not using, I should not have to run out and get it done because city hall says so in order to get my certificate of occupancy. It's my home, I should have the authority to make my repairs as my budget and time allows me to. I certainly agree with them on safety issues, like smoke detectors and unsafe structural deficiencies needing immediate attention, Yes that it’s very important for people's safety. Couple with all of the above, as we all know, it’s very risky to buy right now, because I've been watching the prices come down more and more over the last year when I developed an interest in the area. Homes are not selling, a working couple with kids simply cannot afford ten large $ a year for taxes with a "down the road a year maybe" that there taxes will go down to an undetermined amount which may be up to 35% off. Other bills such as the mortgage, PMI, hazard insurance, heating costs, and unexpected repairs and maintenance. Everything that comes with owning one of these homes is big money, the homes are so large that a roof replacement alone could cost upwards of $20k and what about if your huge boiler dies? This is probably another factor why we are seeing so many vacant homes.... Owners found themselves constantly short, and the phone rang with a teaser mortgage rate which the jumped on and it creped up to an unaffordable amount once the introductory period of low payments was over. City hall needs to make owning these homes easier and more affordable to working families that have a growing family and are in need of a large home. Me, I'm single love history, and I love to collect stuff so these homes appeal to me. City of Detroit is not making this easy and affordable. Nobody in BE or other historical areas should be paying more than $5k a year in taxes, regardless of the roofline or square footage. If there was a ceiling on the property tax amounts, the area would flourish and be in tip top shape and they would be flocking to buy in Detroit. I'd love to buy here. I love the area, and have fully accepted it. I am very cautious as I don't want to get in over my head and lose everything. | ||
Dougw Member Username: Dougw Post Number: 1914 Registered: 11-2003 |
Lobsterpots -- The assessors office gave you misleading information. A. If your house is assessed at $300K, your homestead taxes would actually be $10K/year. Assessed value of $300,000 --> SEV of $150,000 --> $150,000 * 0.066 (mills) = $9900 in taxes per year. (See the property tax estimator link above.) Then, with an NEZ discount of ~25% (that's what mine was), it would be $7500/year. The figure you gave sounds like non-homestead. Still not that great if you only paid $100K for the house. But... B. The city assessors office told you that they would reject your appeal, which is probably true. But what they didn't tell you is that after that step, you can appeal AGAIN at the STATE level. (The city assessor person isn't going to tell you this because they don't want you to know about it.) The state office is totally separate from the city assessor, and almost always, the state will lower your assessment to your purchase price if you can show that it was a fair-market purchase. I know of a few neighbors who had success appealing at the state level, and I don't know of anyone who was rejected at the state level. (If anyone here does know of a case, please speak up.) So, if you had success with a state appeal on a home you bought for $100K, you'd be looking at $2500/year in taxes. The whole city assessor computer formula of $X per square or cubic foot or whatever is mostly garbage and only realistic for homes in good condition. As one example, stucco homes are assessed considerably cheaper with their formula for some unknown reason. Anyhow, if you're really interested in a particular house, you will want to pay the $2 and look up the current SEV on the city tax site: http://tinyurl.com/qtxz4 ...because you might get lucky and find that the house you want to buy already has a low SEV (like mine did) and then you won't have to go through the appeals process. (As you say you can't rely on what's printed on the realtor page because that's the capped value from the prior owner.) You might want to talk to your realtor in more detail about the appeal process, or talk to a couple other realtors to see who knows the most about the process. You are right about some of the other things, such as the ACR, which should probably be abolished. | ||
Dougw Member Username: Dougw Post Number: 1915 Registered: 11-2003 |
Sknutson... I haven't actually gone through the appeals process myself, it would be good to hear from someone who did. | ||
E_hemingway Member Username: E_hemingway Post Number: 1341 Registered: 11-2004 |
The DetroitWoodbridgeDuplex people go into fighting city tax assessments a little here, starting at paragraph three: http://detroitwoodbridgeduplex .blogspot.com/2007/03/i-fought -law-and-it-was-draw.html Useful information. I wonder how their state appeal panned out? | ||
Dougw Member Username: Dougw Post Number: 1918 Registered: 11-2003 |
Interesting. Actually, I heard the same story more recently from a neighbor... on the first appeal with the city, the city assessor split the difference between the assessed price and the purchase price. Better than nothing, anyway. I don't remember now if this neighbor was going to continue the appeal to the state. | ||
Sknutson Member Username: Sknutson Post Number: 948 Registered: 03-2004 |
While I know that the real estate market in Detroit is hurting lots of folks, the bright side is the market for the buyers. My friend here in SF is selling his 1200 sq ft condo - does this look like a good deal to you? http://www.mlsfinder.com/ca_sf ar/herthrealestate/index.cfm?a ction=listing_detail&property_ id=328938&searchkey=48ee8ab7-c 3e0-2b98-c722-67b0c14d0a60&npp =10&sr=1 | ||
Lobsterpots Member Username: Lobsterpots Post Number: 75 Registered: 06-2007 |
Wow! look at the price of that condo in SF. | ||
Lobsterpots Member Username: Lobsterpots Post Number: 76 Registered: 06-2007 |
I did some research today in the BE neighborhood that I am interested in buying. I found some shocking facts: Out of 42 homes on both sides of the immediate area that I am interested in buying,(one and a quarter blocks) up and down, there are 15 delinquent homeowners owing back property taxes from '05 and '06, totaling $102,000. Out of those 15 property owners, only 3 have listed their homes for sale, one of which is a troubled sub prime mortgage lender. 64% of owners in this area are able to satisfy their property tax bill. Given this data, it sounds to me like the worst is yet to come. | ||
Chub Member Username: Chub Post Number: 484 Registered: 11-2003 |
Lobsterpots, I hate to say this, but your bank is doing you a favor by declining to lend you money on a fixer upper in Detroit right now. I bought a fixer upper in the Boston-Edison area in late 2001. I put a ton of hard earned money and time into it that I really didn't have to spend. In the end, I was able to just barely break even when I sold my house earlier this year. I feel blessed that I was even able to sell my house at all. Unless you have an endless supply of cash and don't care about a lot of heartache, I recommend you wait to see what happens with the neighborhood. I saw dramatic decline on my street from 2001 to 2007. In 2001 there were only 2 empty houses on my block. When I left in 2007 there were seven. Constant break-ins, two of my own cars stolen, etc, etc... My brother also lived on Longfellow until this year. He had a break-in last spring where all the leaded glass windows, antique light fixtures, door knobs, and outside storm doors were stolen. This happened in the middle of the day and the alarm did go off. Guess how long it took police to get there? 9 Hours! None of the neighbors cared to even call him after the alarm was going off for some time. I could go on and on about the bad thing that I and my brother went through while living in Boston-Edison, but I'll spare you. My advice as of this moment, live downtown or don't live in Detroit at all. | ||
Lobsterpots Member Username: Lobsterpots Post Number: 77 Registered: 06-2007 |
wow Chub, sorry to hear about the bad times that you and your brother had experienced in BE. Thats a such a shame. I wonder what will happen to BE? By the way, how did you finally get your home sold? I saw some listed on craigs list as well. I wonder what will happen to BE once the next round of foreclosures happens. Seems like there are many homeowners teetering on the edge of foreclosure. | ||
Chub Member Username: Chub Post Number: 486 Registered: 11-2003 |
In 2006 I became a real estate agent, so I got to see first hand how home owners are hurting and how so many foreclosed beautiful homes in BE are getting gutted by scavengers so quickly after the owners are forced out. I'm not really sure how BE will look ten years from now, but I have a sad feeling it won't be good. I can only say I hope I'm very wrong. Believe it or not, I sold my house using Craigslist after dropping the price several times. | ||
Lobsterpots Member Username: Lobsterpots Post Number: 78 Registered: 06-2007 |
Craigslist had a few nice ones that I recall. I saw an ad for a BE home last year and into the spring of this year it was like around $145, then it was $125 for awhile, then it was around $100, and I think it was down to $75. The owner stated that work was almost all done, the owner had mentioned there was only a few items left to do, and was considering renting it if it didnt sell. there was a nice antique oak bedroom set in one of the pics, it probably sold, as the discounting was very aggressive. | ||
Chub Member Username: Chub Post Number: 487 Registered: 11-2003 |
Well, your prices are off a bit, but that was me. (Message edited by chub on September 28, 2007) | ||
Lobsterpots Member Username: Lobsterpots Post Number: 79 Registered: 06-2007 |
Chubs: You surely had that home fixed up real nice. Im surprised it didn't go sooner. Real nice furnishings too. If it makes you feel any better, the house Ive got now we paid $362 in '05 and put $50k down from the sale of a condo, and now I couldn't get $300. The market gulped that $50 cash money that I had sunk in, plus another $25 out of pocket in remodeling just like a boa detatching its jaw and swallowing an egg. I would take a chance on BE but the stealing thing really is a major turnoff. What street were you on in BE if you dont mind, I like Boston and Chicago the most because of the islands in the middle. | ||
Chub Member Username: Chub Post Number: 488 Registered: 11-2003 |
I was on Atkinson, which makes the fact that I sold my house even more of a miracle I think. | ||
Lobsterpots Member Username: Lobsterpots Post Number: 80 Registered: 06-2007 |
so i guess your experience wasnt at all what the historic BE website depicts. I wonder what is going to happen when like you say more BE residents are going to be forced out. I think option arms are going to start poppin soon. Right here, outside of Boston, I am surrounded by four homes that sold for $400-425, all four of them were bought with no money down, piggyback mortgages 2/28 teaser rate deals with exploding ARMs due to rest July 08. There's no way that they will be able to afford a 6k a month mortgage not including taxes come July. It's a national phenomenon | ||
Swingline Member Username: Swingline Post Number: 908 Registered: 11-2003 |
Lobster, while the property tax research you completed showed a troubling picture in some respects, I suspect that it also showed the true property tax levels in BE. The true picture is that the only BE homes being taxed at greater than $10K are those that have been sold since 1995 for an amount in excess of $300K. Not that many BE homes fall into that category. And certainly even fewer sold at that price point would today likely be in "fixer upper" condition. For homes that have not been sold for many years, i.e., not sold since pre-1995, they likely have very low SEV's that are locked in by Proposal A which took effect in 1995. So, if you buy a fixer upper for $150K, it likely already has a low SEV or you will be able to get it lowered at the state appeals level. Once you get the additional NEZ reduction, the taxes on your $150K fixer upper will be about $4K. While this is a larger amount than you would pay in some township in Livingston County, it's a lot less than $10-12K. | ||
Lobsterpots Member Username: Lobsterpots Post Number: 81 Registered: 06-2007 |
Swingline: That sounds like a much reasonable tax amount. Seems as though I will have to fight hard for the reduction amount through the appeal process. Now, the questionable thing is what is going to happen to all of those homeowners in the 40 home radius who have fallen so far behind on their tax obligations? As a disproportionate number are not paying their taxes, it makes me wonder how many of those same residents have also fallen behind in their mortgage payments and may be forced into foreclosure. Based on what I have read, I suspect there will be more of an exodus out of the area, especially by those that purchased in the last few years, at the height of the market. I hate to say it, but it is probable that there will be another massive wave of foreclosures in the coming year. According to the Wall Street Journal, zip code 48206 has between $150-$300 million in subprime mortgage loans. http://online.wsj.com/article/ SB118047548069017647.html What is your prediction about the housing market conditions? | ||
Bostonedisonrocks Member Username: Bostonedisonrocks Post Number: 18 Registered: 03-2007 |
I would like to weigh in on the above discussion. As far as unpaid taxes - check other counties - unfortunately, it is common practice for some people to pay their taxes late. Some always pay them late - but pay them before they can be foreclosed. It's not my way of doing business, but a lot of folks do it. You can't generalize and say all those folks are going to be losing their homes, etc. Stop catastrophizing (Hmmp is that even a word?). Yes, there have been some break-ins and stealing of fixtures in B-E -- most of this is happening in the unoccupied homes. But remember, for every "bad" story being shared, I can give you ten "good" stories. Boston-Edison is made up of some very committed and genuinely good people. This recent stream of postings makes it sound like we are down and out for the count. Believe me - that is far from reality. I know all my neighbors on my block. We look out for one another - watch each others homes when we go on vacation, we have a block club that encourages involvement, etc. B-E also has a strong Association that deals with owners of unoccupied homes, encouraging on-going upkeep and maintenance. The B-E Security committee serves as a liaison to the local Police Districts. We now have Police walking our neighborhood. Yes - that is correct. They park the car and walk the streets, talking to neighbors, etc. I walk my neighborhood (almost) daily - walking my dogs up and down the streets in B-E -- I have never had a problem of any kind. Neighbors stop me and chat -- it's a great place to live. As for Chub's comments about his home - it was on Atkinson - that is NOT Boston-Edison. Yes, it may only be one street away, but he is obviously not privy to all that is being done in B-E. Perhaps folks need to attend the Historic Boston-Edison Annual Holiday Home tour this December. Get a birds eye view of some actual homes -- . By the way ---- Did anyone attend the Living in the D Event put on by Cranes --- three B-E homes were asked to participate - and I hear they got great reviews. Some neighbors even gave an historical walking tour of some of the homes in the neighborhood. | ||
Lefty2 Member Username: Lefty2 Post Number: 232 Registered: 07-2007 |
I would love to own one of these homes, but what is keeping me back is the high taxes to support a failed school system and the lack of protection. In my educated guess I would wait about 2-3 years to get the bottom market price. Buy a home cheaper than rent somewhere and wait until the market turns. BE has some of the best built homes in the country for the money. | ||
Chub Member Username: Chub Post Number: 489 Registered: 11-2003 |
Your right BErocks, I don't know what I'm talking about. How could I know anything after walking the streets of BE every day, having family that owned a house on Longfellow, living on Atkinson, being a real estate agent that had houses listed in BE, helping board up and secure multiple houses in BE, talking with my neighbors and friends on Edison, Longfellow, Chicago, and Boston; there is no way I know what's going on. Listen, I spent six years talking just like you and trying to convince people that BE was just great and that everything was getting better every day. Looking back, I wasn't being honest with myself and others. Oh, and another thing people should know; If you buy one of the beautiful houses one street away on Atkinson, be prepared to be talked down to and treated like a lower life form by people that live in BE proper. You're not as good as them and you don't know anything. And... if you live in BE on the west side of the Lodge, you're not as cool as the people that live East of the Lodge. Also... if you live on Edison or Longfellow, your looked down on by many people that live on Chicago and Boston because your house is smaller. Believe it or not, I ran into a lot of this kind of attitude when going to BE events. | ||
Buddyinrichmond Member Username: Buddyinrichmond Post Number: 239 Registered: 02-2004 |
Will anyone be organzing a Living in the B-E event? The Villages on the eastside just had a Living in the V event. Maybe it should be called Living with the B and E's? |
