About Dan Krell

July 30, 2010October 5, 2019

Appealing your property taxes; verify licenses of companies soliciting you

by Dan Krell © 2010

Since the decline of the housing market, many home owners have appealed their property tax assessments. The appeals process is straightforward and is laid out on the Assessments and Taxation website: www.dat.state.md.us/sdatweb/appeal.html.

The appeal process can be broken down in several discrete steps. The important thing to keep in mind is the filing deadlines; however, if you miss one deadline you can file during the subsequent cycle.

There are three times you can file an appeal; upon re-assessment; upon purchase; and you can petition for a review. Since homes are assessed every three years, you can file an appeal within 45 days of receiving the assessment notice. If you’re a new home owner, you have 60 days from the day you take title to file your appeal, but only if you settle between January 1st and July 1st. If you miss these deadlines or you feel that conditions have changed such that your home value has decreased between assessments, you can file a petition for a review before January 1st.

To be most effective authorities recommend that you: stay focused on what affects your property value; provide reasoning why the “Total New Market Value” is not accurate; point out errors on the assessment worksheet and/or in the description of the home; support your appeal with recent sales comparables.

The first step of the appeals process is called the “Supervisor Level.” This is where you will meet with a local level official to present your case. It is recommended that you obtain local sales information to support your case, which can be obtained from various sources such as (but not limited to) a library, public records, or a local real estate agent. For a nominal fee, the assessment office offers worksheets listing comparable properties. At this level, you basically present your evidence as to why the department’s assessment is inaccurate.

If you’re unsatisfied with the initial decision, step two is to file an appeal to the Property Tax Appeal Board. The appeal to the PTAB must be filed within 30 days of the final notice from the Supervisor of Assessments.

If the PTAB decision does not satisfy you, step three is taking your appeal to the Maryland Tax Court. If you’re not content with the MTC’s decision, you can file further appeals; however further appeals must be in the judiciary system (and it is recommended you hire an attorney).

Even though the property tax appeals process is straight forward, there are companies that will assist you in your tax assessment appeal for an upfront fee. Although the tax assessment appeals industry has been around for many years, it has mostly been focused on more complicated and business related tax issues. Some of the tax appeal business newcomers have organized in the last couple years and target homeowners; some operate through recruited “affiliates” who make referrals for a fee. Furthermore, some of these businesses lack appropriate licenses and offer nothing more than information that is already publicly available.

Many homeowners successfully undertake the appeals process on their own; however if you choose to employ someone to assist you, ask questions about their business as well as check if they’re licensed and reputable. Licensing can be verified through the Maryland Department of Labor, Licensing and Regulation; other concerns can be cleared through the Office of Consumer Protection.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of July 26, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

July 22, 2010October 5, 2019

Hiring family to sell your home: A relative experience

by Dan Krell © 2010

The thought of hiring a real estate agent can be unnerving, let alone the fact that you might have to consider hiring a family member to act as your listing agent. For some, familial pressure to hire a relative could be intense and may be a potential source of conflict; while for others, no one but “Cousin Jerry” would be considered to list their home.

Some people are ambivalent about hiring relatives for any service, let alone for a real estate transaction; they believe that mixing business with family matters is not a good idea. Besides asserting discretion over their business and financial dealings, these folks know that family ties and relationships could be at stake if the sale doesn’t go as expected. They do not want family matters or guilt to interfere with business decisions, especially if they feel a need to fire their real estate agent or even seek recourse.

Still many people do not have a second thought about hiring their “Cousin Jerry” as their listing agent. Besides feeling an expectation to do so, some people cite a comfort level and trust that exists from their long time relationship (which can be hard to come by when working with a stranger).

Many experts agree that it is not a good idea to hire a relative who is inexperienced and/or has a record of poor performance. So if you plan to hire a relative to list your home, consider that practicing real estate can sometimes be difficult even for a seasoned professional, let alone someone who is new to the field and/or is a part-time practitioner.

Believe it or not, the issue of commission is typically secondary when it comes to hiring a relative to list a home. Don’t expect to pay the least amount of commission if you plan to hire “Cousin Jerry” to list your home; he may be directed by his broker on commission negotiation. The fact is that most real estate agents are negotiable when it comes to commissions and you might find a better deal from someone else.

If you’re intent on “keeping it in the family” consider interviewing “Cousin Jerry” as you would any other real estate agent; become familiar with “Cousin Jerry’s” license and experience. Although “Cousin Jerry” may have a real estate license, it may not be in the jurisdiction where your home is located. However, if his license is within the proper jurisdiction- he may not be experienced in the local market.

“Cousin Jerry’s” lack of local market experience could jeopardize your sale by not providing the proper disclosures and understanding the various contracts of sale. Seller disclosures requirements may vary depending which county/city your home is located; even full time agents have a difficult time staying on top of county differences in seller disclosures. Additionally, “Cousin Jerry” should be careful to pay attention local agent etiquette, as potential buyers could be turned away.

If you want to work with “Cousin Jerry” but want to mitigate family interference, a couple of alternatives you might consider include: having “Cousin Jerry” refer you to an experienced local agent for a referral fee (so he is indirectly involved); or, have “Cousin Jerry” work in tandem with an experienced local agent so a professional can act as a buffer from family matters.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of July 19, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

July 15, 2010November 28, 2020

Mortgage oversight agency (FHFA) could stall county greening efforts

Last week, a federal oversight agency raised concerns about a green retrofitting loan program in an effort to protect consumers and the integrity of lending practices. Normally, this would not seem unusual; however on June 6th the Federal Housing Finance Agency (FHFA) issued a statement that affects many Property Assessed Clean Energy (PACE) programs across the country, and may affect Montgomery County’s Home Energy Loan Program (HELP) even before it officially kicks off later this year.

As part of a national initiative to reduce energy consumptions and curb greenhouse gases, PACE (pacenow.org) programs are intended to make green retrofitting affordable for home owners. The program generates funds for the retrofitting through “tax lien oriented financing” by selling “PACE bonds,” and is repaid by the home owner through annual tax assessments.

Enacted through Council Bill 6-09 (April 2009), HELP is Montgomery County’s local green retrofitting loan program, which is part of a first wave of PACE programs implemented throughout the country. Although HELP is awaiting a green light from the County Council to get underway, the county’s Department of Environmental Protection is preparing to manage the program. HELP’s financing arrangement is anticipated to allow a home owner to repay the “loan” over fifteen years through their property tax bill.

As the oversight agency for Fannie Mae, Freddie Mac and the Federal Home Loan Banks, FHFA’s (fhfa.gov) statement cited concerns about “certain energy retrofit lending programs,” specifically referring to local tax assessment loan programs by PACE. “Safety and soundness” concerns were cited because the PACE tax liens could interfere and disrupt a “fragile housing finance market” due to the “absence of robust underwriting standards to protect homeowners and the lack of energy retrofit standards to assist homeowners, appraisers, inspectors and lenders [to] determine the value of retrofit products…”

Although FHFA has collaborated with government agencies, state and local officials to work through their concerns, the issue appears to be unresolved. FHFA’s statement asserts that the tax assessment created through a PACE loan is unlike the typical tax assessment; such that the term and amount of a PACE related tax assessment exceeds a typical local assessment and do not have the usual community benefit that is associated with local tax initiatives. Additionally, the concern over such modifications would “present significant risk to lenders and secondary market entities, may alter valuations for mortgage-backed securities and are not essential for successful programs to spur energy conservation.”

Notwithstanding some critics concerns over the obsolescence of a green retrofit before such a loan is repaid, additional concerns raised by FHFA include: the shift of traditional lending priorities (PACE investors have minimal risk due to the first lien position); PACE program’s collateral based underwriting does not take into account the home owner’s ability to pay; the lack of lending disclosures (such as required by the Truth-in-Lending Act and other consumer protections); “and uncertainty as to whether the home improvements actually produce meaningful reductions in energy consumption.”

It remains to be seen whether HELP will be affected by FHFA’s new guidelines to Fannie Mae and Freddie Mac to deal with PACE loans. However, FHFA stated that the concerns were not raised to undermine programs meant to reduce consumer energy consumption, but rather to encourage the implementation of retrofitting loan programs with “appropriate underwriting guidelines and consumer protection standards.”

July 6, 2010October 5, 2019

Who’s looking out for your interests?

When people buy and sell real estate, they entrust professionals they hire with some of their most sensitive information, at times when they are most vulnerable, with the expectation that the professional act in their best interest. The Maryland Real Estate Commission’s form, “Understanding Whom Real Estate Agents Represent,” reminds consumers that the ultimate responsibility of protecting their interests falls on their shoulders. Although the form itself is used to assist consumers in understanding the duties and loyalties of real estate agents in various forms of agency relationships (e.g., a listing agent’s “duty of loyalty” is to the home seller, a buyer’s agent is expected to negotiate “in the best interests of the [home] buyer,” etc.); the paragraph on page two gives consumers the reminder that to protect their interests, they should read all documents carefully and to seek legal advice from an attorney and financial advice from an accountant.

The consumer reminder might be taken as somewhat of a warning that real estate can sometimes be a dirty business. It is true that most real estate practitioners operate within the law and ethical guidelines, however some do not. It is reasonable to think that recent economic conditions purged the industry of bad elements, think again. Some actions are egregious and are clearly intended to defraud the public; while other actions may appear to be innocuous, but could be construed as deceitful business practices.

Blatant scams are devised every day to appear to be legitimate but have the intention of exploiting the public; recent examples include the rise of foreclosure relief scams across the country. Unfortunately, some of these cons are not always obvious until law enforcement catches up to the perpetrators. Take for example the recent indictment of a Towson, MD title company president who allegedly did not send payoffs to existing mortgage and lien holders and allegedly transferred the funds for his personal use (www.justice.gov/usao/md/Public-Affairs/press_releases/press10a.htm).

Even business tactics that seem harmless, but can have detrimental effects, are sometimes used by real estate agents. One example is overvaluing a home by estate agents just to get a listing. This occurs with the intention to later “convince” the seller to lower the price (the effects of purposefully over pricing a home in a downward market can cost the home seller money). Another example is akin to a “bait and switch:” this agent advertises a fictitious home at such a low price it gets home buyers to call him. When I called on behalf of my client to view the advertised home, the agent told me that the advertisement is for informational purposes only.

Before you hire a real estate professional (including real estate agents) it is always a good idea to check out their licensing credentials, as you can sometimes run across someone who is not licensed; Maryland licensing agencies allow consumers to check a professional’s license status online. Many consumer advocates recommend that before you hire a professional you should interview several and ask for recent client references.

Who are you trusting with your real estate transaction and what are they telling you? The old saying that “if it sounds too good to be true, it probably is” may be true, but it is ultimately up to you to decide. Remember that the ultimate responsibility to protect your interests falls on your shoulders.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of July 5, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

June 29, 2010October 5, 2019

Employment is the key to a stable housing market

by Dan Krell © 2010

The one question that everyone is asking, “where is the housing market headed?” A new focus is needed to stabilize the housing market as the national home buyer tax credit expires (state home buyer tax credit programs, such as California, may continue through the end of the year), and criticism for government foreclosure relief programs increases.

As the national home buyer tax credit sunsets, some in the industry (such as the National Association of Realtors) are scrambling to get a further extension. Proponents of the tax credit point to home sales spikes through the year as evidence of the tax credit’s efficacy. A June 25th NAR press release (realtor.org), described efforts to extend the closing deadline to assist those who could not close by the June 30th target. An amendment to extend the deadline was inserted into H.R. 4213: “American Workers, State, and Business Relief Act of 2010,” which passed both the House and Senate, but still needs to go to conference prior to becoming law.

Doubt remains over the efficacy of the home buyer tax credit; many critics applaud its none too soon conclusion. Putting aside the reports of fraud and abuse by those who have undeservedly filed for the credit, Fannie Mae’s March revised 2010 housing outlook (Economic and Mortgage Market Analysis; March 17, 2010) expressed doubts over continued effectiveness. The report cited various reasons that the most recent tax credit would not be as successful as prior tax credits. June’s Economic and Mortgage Market Analysis (FannieMae.com) reported that the most recent tax credit in fact only temporarily boosted home sales in April. April’s increased sales may have been due to many home buyers seeking to meet the initial qualifier for tax credit (which was to have a contract on a principle residence).

In addition to increasing home sales is the attempt to keep distressed home owners in their homes. Reports criticizing government mortgage modification and relief programs citing a lack luster performance seem to be appearing with increased frequency. Take for example the an April 20th Bloomberg story citing the Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky (“U.S. Treasury’s Housing Program Fails to Stem Foreclosures, Watchdog Says”). Mr. Barofsky criticized HAMP (Home Affordable Modification Program) saying it has made very little progress. Additionally, it is estimated that 40% of those helped will eventually default; which could stem from HAMP’s high median debt to income ratios of 61.3% after lowered mortgage payments (FHA guidelines allow for a maximum overall debt to income ratio of 41%).

Since the fourth quarter of 2008, housing indicators have been inconsistent (much like other economic indicators). Even though doubt exists about tax credit and foreclosure relief effectiveness others argue the future of housing may lie with employment and personal earnings.

A recent Florida Realors® study (“The Face of Foreclosure”; floridarealtors.org) points out the correlation between unemployment and foreclosure. The April 6th 2010 press release quoted, Florida Realtors® vice president of public policy, John Sebree, as saying “…In most cases, it was a combination of rising living costs, unemployment or decreased pay, health issues and other factors that caused homeowners to get into trouble. Simple answers and trite political responses just don’t tell the whole story.”

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of June 28, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.