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Ask the Patch Pro: Your Real Estate Questions

'Tis the season for buying and selling homes. Do you have questions? Post them and you'll get answers.

Last month, I sold my house and bought another. Looking back, there are several questions I should have asked.

When is the best time to put a house on the market? Is it still a buyers' market? What are the best last-minute updates to do before listing a house?

After the success of a forum on Patch last week, in which readers posed to Urbandale Fire Chief Jerry Holt, it got me thinking that it would be perfect timing to bring in a Realtor to field questions about real estate. 

Robin Sueppel of in Iowa City has graciously agreed to monitor the thread and answer your questions.

You can start posting your questions in the comment section below at any time. I asked Robin to start monitoring the thread beginning Thursday morning.

We also have a number of real estate-themed bloggers across the state on our Iowa Patch sites who are invited to chip in with advice as well, if they wish. 

In case you aren't familiar with our fantastic real estate bloggers, here they are:

  • , with , blogs in Marion.
  • , with , blogs in Ankeny.  
  • , with RE/MAX Innovations, blogs in Waukee. 
  • , with , blogs in Ankeny.
  • , with Pro Homes Solutions, flips and sells houses in Iowa City.
Ryan O'Leary April 11, 2012 at 11:14 PM
John, since Iowa has the second highest commercial property taxes, I can assure you that the McDonald's comparison would produce counter-intuitive results. In fact, a friend of mine owns the local franchises and when he submits plans for a new location the corporate folks are always amazed at how high the taxes are,,,even compared to California. As for your other inquiries, they are much more complicated than you would presume. It would take at least 45 minutes to give a simple answer that had little to no statistical reliability, while a 4-5 hour comparison search of several properties in each market would still derive modestly reliable results. The best results would come from having an expert in each market give you a comparison of several properties with very rigid criteria. As for the commercial properties, the tax comparisons would be even more difficult as most rented commercial offices are not autonomous buildings on separate parcels of land. You would need to find out the rate of taxes per square foot of rentable spaces. You could get a really quick and easy comparison by sifting through assessors' sites for a few hours, but for anything other than dinner party conversation starters you would need a much more thorough understanding and analysis.
Robin Sueppel April 12, 2012 at 02:28 AM
Hello everyone, this is Robin and I can not wait to answer questions until tomorrow. As most Realtors know if you put something off you may be bombarded the next day with things to do. I choose to work ahead:)) Beth, this is a tough question. I will answer it from my experience as an Iowa City agent. The assessment that I think that you are talking about is the Real Estate Assessment that the counties use to "Assess" your homes value for tax purposes. The assessed values do not really affect the market value of your home. The market value is based on recent comparable sales in the area that you are purchasing. As far as hedging against lower property values, the best thing that a homeowner can do is to maintain and keep their home updated. You can not control the market but you can control the condition of your home.
Robin Sueppel April 12, 2012 at 02:37 AM
Jody, Many people are refinancing at this time. Interest rates are low. Closing costs are low and people are trying to stay in their houses longer and pay them off in a shorter time frame. With all that said, rule of thumb is to check the interest rate and calculate if the cost of the refinancing will be made up in two years or less. Also, you should be planning on staying in the house for over 5 years. Otherwise you are just paying back the amount that you paid to refinance. So simply put: I have borrowed $200,000 for a 30 year fixed rate loan with an interest rate of 5.0%. I can drop my interest rate to 4.0 % for another 30 year fixed rate loan. In order to do so I must pay $1000. in closing costs. $200,000 for 30 years would have my PI (principal and interest) be at $1073.64 at 5.0% and $954.83 at 4.0%. A savings of $118.81 per month. If I divide that into the $1000 closing costs I will pay for the refinance in about 8 1/2 months. If I am staying in the home. I would refinance. I am also going to include Janet Norris from Two Rivers bank into this conversation so she can add any other advice that I might have missed. That is more her area of expertise.
Robin Sueppel April 12, 2012 at 02:58 AM
Anne, when you speak of a home improvement loan, I am going to assume you are talking about a home equity loan, or a 2nd mortgage on your home. These products basically depend on the person that is taking the loan and also how they will use the loan. The example we will use will be on a $20,000 loan. In the home equity loan, you will be signing the papers and getting the $20,000 up front and you will pay interest on the entire amount. You will then make payments on this loan amortized over the length of time you have taken the loan. Typically, 5 years (4% interest for our scenario) You will then pay back PI of $368.33 per month for 5 years and the loan will be paid off. On a home equity line of credit loan. You will still sign papers on borrowing the $20,000 but it is a draw account that you only pay on the amount that you withdraw from the account. So say you redo a bathroom and it cost you $10,000. You will draw the amount out of the account and begin paying interest on the $10,000. You also have the option on most of these accounts to pay interest only until the loan is due. (Typically 3-5 years) The advantage is that you can pay it back and barrow against it without paying additional fees You also only pay interest on the money you are using at the time. The disadvantage is that you have to be disciplined in paying the loan back or it will always have a balance. You will have to pay off a lump sum once it is due or reapply for the loan.
Janet Norris April 12, 2012 at 02:05 PM
Jody, I agree with Robins Comments about the refinance. The rates are low, but your lender should always run the number to make sure it benefits you in the long run. The factors of rate, how long your going to be in your home and re cooping cost are all important questions to ask when thinking of refinancing. Janet, Two Rivers Bank #465257
Sabi Popelka April 12, 2012 at 02:51 PM
What exactly is the process when you buy a home that is foreclosed? Is the price negotiable? What is the buyers responsiblities?
B.A. Morelli April 12, 2012 at 03:56 PM
To jump on Sabi's question, is buying a home that is foreclosed the same as a short sale? And, what are advantages/disadvantages of buying a foreclosure/short sale? It seems like the price is often really good on a foreclosure.
Robin Sueppel April 12, 2012 at 04:38 PM
Well, thank you Ryan. As you can see he is more the commercial expert then I am so I am glad he handled the commercial aspect. As far as the residential, it is somewhat similar. Taxes are based on so many things to just say 3-4 bedroom 2500 sq ft home comparison would not do it justice. First of all because taxes typically are based on the value of the home. As we are aware values in all of these areas are extremely different. You can pick two suburbs in the Chicago area and find property values are different and their taxes may not be reflective of this difference. Property taxes can be based on special assessments in any area, for schools, jails, and other community needs. My questions back to you is why you need this information? That may help be to come up with a more definitive comparison for you.
Robin Sueppel April 12, 2012 at 04:50 PM
Foreclosure Beware! I am going to start out with the difference between the short sale and a foreclosure. On a short sale in most cases the Owner of the property is still the deed holder and not the bank. The bank however, has agreed to take less for the house then the "liens" on the home. For example: The home has 1st mortgage of $150,000, 2nd mortgage of $30,000, and sales cost of $16,000. In other words in order for the bank to allow the Seller to sell the home and give free in clear title. The home owner would have to have an offer of $196,000. The seller can not afford their mortgage payments, and have not been paying for approximately 6 months. They have just received an offer of $180,000 and would like to take it. In order to do so, the bank would have to in writing agree to release the full mortgage amount so that the new owner has clear title. Sometimes they are willing to do this as they do not want to have to sell, maintain and foreclose on the property as it is expensive for them to hold the home. DO not count on this option. People come into our market and think this is a good way to walk away from their home. Some lenders will also hold the additional amount back, release the lien on the home but the Seller is still responsible to pay back the difference.
Robin Sueppel April 12, 2012 at 05:07 PM
Foreclosed properties have typically been repossessed by the lender and the bank or Fannie Mae are then selling the property. The benefit of buying the short sale vs the foreclosed property in our area is that the foreclosed properties have typically not been maintained for a while. There can be water problems, mold problems and nothing has been repaired. You are also buying this property "as is". Definately a home that you would want to have a good inspector tell you what problems you will have to face once you buy the home. Most of the short sale houses have still been maintained as the owner typically is still taking care of the property. Typically these transactions are difficult to get closed. In a typical transaction you can get a response to an offer in 12 - 24 hours. On the short sale and foreclosure, you can look at between 72 hours and up to months sometimes years, to get a firm commitment on your purchase. If you are in a time restraint period, I would not take either of these routes in a purchase. We have people that call us that just want to buy foreclosed or short sale property. In my opinion, do not close the door on other options. You may pay less for the house but may have to do more work, which essentially, cost you more in the long run.
Robin Sueppel April 12, 2012 at 05:13 PM
Sabi, The foreclosure process in many ways is similar to the purchase of any home. The steps that we suggest to people are: 1) Find a good Realtor that has worked with the type of home you want to buy 2) Find a lender and get prequalified to purchase a home 3) Start becomming educated in the area and price range you want to purchse by looking at homes 4) Make an offer on the property ( All prices in real estate are negotiable, just depends on terms and conditions ) Buyer Beware! Especially in foreclosure and short sale. That is why we suggest you get an educated, experienced Realtor working with you in your purchase.
Todd Richissin April 12, 2012 at 08:06 PM
Robin -- and anybody else: Do you know about the cookie-baking trick? Is it silly or does it help. This is advice that I read to bake cookies in the house before Open Houses. Supposedly, that makes the visitors see -- or smell -- the house as more homey.
Laurie Culp April 12, 2012 at 11:33 PM
A quick answer to that is yes, it does help. Our sense of smell makes us remember something in a very tangible way. Combine that with a sparkling clean home at the price and you have a winner.
Laurie Culp April 12, 2012 at 11:37 PM
I tell folks if it is a full percentage point difference, it is worth it to refinance. With the money you save every month, start an emergency fund, or make an extra principal payment with it. Any way you slice it, this is the best time in history to buy or leverage property because of these rates.
Laurie Culp April 12, 2012 at 11:44 PM
In the Des Moines metro market, foreclosure homes are relatively straightforward, like a regular sale. There aren't any "big bargain" properties out there. Our foreclosures generally run 20-25% less than retail value. As of March, our market has turned from being a buyer's market into a seller's market, as we have less than 6 months inventory in most price ranges. It's good to look at everything, then weigh your options.
Mark Charter April 12, 2012 at 11:55 PM
Todd, That is funny because I told a client to do that tonight! It absolutely works. Who doesn't like the smell of fresh baked cookies??? The trick is you want people to stay a long time in your home. The more comfortable they feel, the longer they will stay.
Robin Sueppel April 13, 2012 at 03:29 AM
Todd,  Oh yes, it is a not so well kept secret.  Bread, cookies, anything goes.  I love to sit at open houses and munch on the cookies that I have talked my clients into baking.  After all it is to sell the home.  :)). Seriously,  everyone kind of knows that trick now so they can not be fooled.  Smell however is a major factor in buyers purchasing of a home.  The smells to really stay away from: sour milk, dirty laundry, litter boxes, wet dog, animals in general and overwhelming deodorizers.  The smells that commonly attract:  just good clean home that has some fresh air circulating.  Bleach, "fresh linen" (if your laundry is centrally located just running load of laundry can help) flowers, vanilla.  Nothing in excess!  
Todd Richissin April 13, 2012 at 12:32 PM
Lauire, Mark, Robin: Thanks! Here's something else I wonder about...Is there a best time of year to be buying a home if kids and school are not an issue? I bought mine over the holidays and think I got a decent deal because there just weren't a ton of buyers that time of year. On the other hand, I guess there's also not as many homes on the market. Any thoughts?
John Norwood April 13, 2012 at 01:04 PM
Ryan-Many thanks for your response. Couple of follow ups. What is your support for Iowa having the second highest property taxes? I don't believe that is the case. It may have relatively high RATES, but that is offset by lower valuations. A recent MN tax study showed that Iowa's commercial property taxes are actually fairly reasonable. If one wants to compare taxes with NYC, I think one needs to look at the assessed value of an equivalent amount of space as Iowa City or Des Moines, for example. One can't just look at rates because that's only half the story. As far as commercial rental rates for office space, for example commercial Class A, those would have taxes imputed as part of the rent. So, if we compared rental rates across states that would give an approximation of the relative advantage/disadvantage of space in different markets. I would be delighted to see the tax information for the McDonalds in several different locations. As long as the gross revenues were similar, that would give an interesting comparison of what portion of revenues go to paying taxes. Given the lack of support provided by the proponents of commercial property tax reform, I haven't been persuaded so far. I'd like to see a more complete analysis. The DM Biz Record just did a story on the best locations for data centers and Iowa did very well. Property taxes did not appear to be out of line, nor were they a major component of the cost structure of those businesses. Thanks!
John Norwood April 13, 2012 at 01:25 PM
Robin-I'm interested in tax policy and the relative advantages/disadvantages of Iowa. Having lived in many different parts of the country, I have seen the relative advantage of our lower tax burden. So, the fact that others are saying they are too high, doesn't make much sense to me. Tax rates are a function of property values as you note. So, trying to compare tax rates across regions doesn't make much sense. You can't just hold the property value constant and say "well, the $200,000 house in Iowa has higher taxes than the Chicago house, Iowa's taxes are too high!" Because these are likely two very different houses. So, a true apples to apples comparison would be to look at equivalent physical space. It's not perfect, but it would begin to account for the fact that property valuations do matter when it comes to understanding tax impacts. So, that's what I'm trying to get at. I know I pay here in WDM about the same tax burden or 1/3 to 1/2 of other large MSAs across the country where I have friends and family. The big driver in all this is my house cost 1/3 to 1/2 of what it would cost in another metro. Thoughts? Thanks!
Mark Charter April 13, 2012 at 01:37 PM
@Todd, It depends. The bulk of inventory hits the market this time of year, which means more options to choose from, but also more competition. I tell my clients that if someone is selling during the winter months, it is usually because they have to, not because they are just kicking tires. That means you might be able to snag a better deal as the seller is motivated. At the end of the day, this would be a tough thing to prove, but my thought is you get the best deal when the seller is motivated to sell regardless of the time of year.
Mark Charter April 13, 2012 at 01:42 PM
@John, according to the attached article, Iowa has the 2nd highest commercial tax rates in the country and the 16th highest residential rates. Not sure if it is true or not, just passing along the article that says it. http://theiowarepublican.com/2012/house-passes-historic-property-tax-reform/
John Norwood April 13, 2012 at 02:58 PM
Mark- Thanks for the reference. Couple of thoughts. First, as you note there's a difference between rates and burdens. The source for Iowa as the 16th highest residential market is the DC Tax Foundation's 2012 report. That ranking is based on taxes as a share of median housing value. Iowa is listed at 1.34%. Hawaii has the lowest rate at 0.27%. Why? Because housing is so much more expensive there! They can apply a lower rate. If you look at other statisics in the tax foundation report such as state and local property taxes per capita, Iowa is almost in the middle at 22. If you look at total tax burden per capita it is 26th. We're hardly a state with out of control taxes. As far as commercial taxes, the 2010 NAIOP report -- MN Commercial Real Estate Association -- has done an annual survey for about 20 years comparing equivalent commercial properties across a number of states. This is on an "apples to apples" basis....starting with a facility of equivalent size. What did they find? Iowa has lower commercial property taxes than MN/SD/FL/MN/IL. So this business about Iowa's Commercial Property tax burdens being the 2nd highest in the country just doesn't make sense. I'm still waiting to see some evidence. The MN Taxpayers foundation published another study that folks like to cite. But that one makes a silly assumption that you can take $25 million and buy the equivalent facility anywhere. Then they apply location specific rates. That's nuts.
Mark Charter April 13, 2012 at 04:30 PM
@ John, this is what I do know and what matters most to me and most other people who own a home. What am I paying and how fast it is going up? When will it end? When I bought my Ankeny home is 2007, my taxes were $4962. My taxes now are $7122 a year. That is an increase of 44% Will I have to pay $10,255 for my house 5 years from now? At some point it has to stop. There is only so much people can afford to pay.
Anne Carothers-Kay April 13, 2012 at 05:03 PM
What about interior paint colors? I've always heard you should stick to beige, but I painted my kitchen a bold color. I did it because I liked them, but I'm wondering if that will hurt me when/if I decide to sell.
John Norwood April 13, 2012 at 05:18 PM
@ Mark, Very interesting. Your compound annual rate is 9.5% which, I agree, is very high. My home in WDM has gone from $3,900 (2007) to $4,967 (2011). This is a compound annual rate of 4.95%. I also agree there is a limit to what folks can pay, and generally speaking if cities are doing a good job they should be growing their budgets at about the rate of inflation, or maybe less (2-3% per year). What I'd suggest to you is the problem isn't so much with the state system of how to allocate the taxes between classes of property, it's with your cities growth and spending/subsidy policies. I bet you may find the reason why your taxes are growing so fast is your taxes are being used to pay for city overhead while the city uses taxes from new growth areas financed by TIF to support new roads and sewers to those areas vs. paying for fire, snow plowing and the like. That is generally how TIF works. The taxes paid go to new infrastructure vs. overhead. The R plan to cut commercial taxes rates is going to do one of two things; a) cut services; b) shift more taxes to your home in the form of property taxes or other user taxes. I agree the state needs to work with the cities to fix runaway health care and pension costs. Those are the other principle drivers of runaway city costs. But in terms of your situation, I think that's primary an Ankeny problem. To what extent should you and other existing homes and businesses be expected to finance the city's expansion?
Mark Charter April 13, 2012 at 08:30 PM
@Anne, Bold colors are fine in moderation. An accent wall here or there is totally acceptable. Where I see the most problems is kid's rooms. That is where you see the bright pinks and purples or any number of weird color choices. If I am asking a client about their thoughts after seeing ten homes and they say something like "oh was that the one with the purple room", that is a bad thing if you are the seller. You do not want buyers focusing on negatives like paint colors. Yes, it is an easy fix for them, but buyers can be fickle so tread lightly. My thought is this. when you are an owner and are not selling, do whatever you want to the place. it is yours so enjoy it. However, when you go to sell it, you are no longer just a homeowner, you are now a home seller and different rules apply. Since you are now moving, do you really care if you have to stare at beige walls for a few months? Paint them a neutral and eliminate the reason a buyer might pass up your home.
Laurie Culp April 13, 2012 at 10:30 PM
The window between Thanksgiving and January 31st is a great time to buy!
Laurie Culp April 13, 2012 at 10:35 PM
Surprisingly, beige has fallen out of favor as a neutral in homes these days. Buyers gravitate towards a more saturated color like taupe or a darker khaki. If in doubt, go to open houses on the weekends and see how sellers stage their homes.
Robin Sueppel April 15, 2012 at 08:01 PM
Anne, I find the bold colors are selling well here in Iowa City. If you watch color trends on pottery barn you will probably stay consistent with trends here. Personal feeling, enjoy your kitchen, that is the beauty of home ownership, you get to choose the color. Paint is fairly cheap, when you are ready to sell, readdress this issue with your Realtor.

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