Home buying questions I should know, but I don't

[ghyland7]

Assuming it is similar to Iowa, you haven’t even seen the bill for those new assessments. Those won’t come for another year.

But just as long as the entire tax base went up 20%, it doesn’t matter as much. If only yours went up 20%, that’s a problem.

Levy rate = City Budget / Tax Base. So if the denominator goes up 20%, the levy rate should drop accordingly. But, and here’s the kicker, the citizens need to hold the city or county accountable to that budget amount. Just because the tax base went up 20%, that doesn’t make it fair game to raise the budget by 20% and hold the levy rate steady.

I used to work for some of the suburb utilities. I was very involved in the budgeting/levy discussion for those smaller utilities.

Most municipalities just set their budget and divide by the tax rate, like you say.

But… city expenses are also going up. Police unions ask for raises commensurate with inflation at least. Construction and maintenance costs rise when contractors charge more.

I know we tried to keep the tax burden from rising too much any given year, but cities don’t have a magic wand to avoid increasing costs on their end.

If there are a bunch of superfluous new things added to the budget, by all means, go to a public meeting and try to get those items removed from the budget to lower tax rates (or utility rates). Or, if you think certain services should be cut, you can try to argue for that.

 

[Clonehomer]

I used to work for some of the suburb utilities. I was very involved in the budgeting/levy discussion for those smaller utilities.

Most municipalities just set their budget and divide by the tax rate, like you say.

But… city expenses are also going up. Police unions ask for raises commensurate with inflation at least. Construction and maintenance costs rise when contractors charge more.

I know we tried to keep the tax burden from rising too much any given year, but cities don’t have a magic wand to avoid increasing costs on their end.

If there are a bunch of superfluous new things added to the budget, by all means, go to a public meeting and try to get those items removed from the budget to lower tax rates (or utility rates). Or, if you think certain services should be cut, you can try to argue for that.

Agreed. I’m just pushing back that a 20% increase in assessment does not equate to a 20% increase in property tax. It’s based on the city’s budget more than the value of your house. As long as your percentage of the overall tax base stays the same, any increase in tax bills is because the city is spending more, not because your assessment went up.

But, I can see where a city would use this as an opportunity to spend more. They can still tout lowering the tax levy rate while increasing their budget. That’s what the public needs to be aware of and question new expenditures as you said.

 

[BACyclone]

SIAP. I am a lawyer and do real estate work.

Do NOT skip the title opinion. You’d rather know now that you have clear chain of title.

Odds are there are no issues, but if there are issues, it’s much easier to either make sure it’s fixed now (or you walk away).

This is an important point. Our first experience in real estate was in Michigan. Getting a title opinion there was standard fare. It seemed like there was a title agency next to every CVS.

Move to Iowa, and during the buying process we asked about getting a title opinion and the buyer's agent gives us a raised eyebrow, like you wanna do what?! We had to do our own research to find someone to look everything over, and was not easy at all. There were not any "title agencies" in that area as I recall, and I think we settled on a real estate lawyer.

The house we are in now was built in 1918. The abstract is like an encyclopedia or an old family Bible.

And, to the point of the current topic, this house was significantly remodeled in the late 80s including with new windows, but I think of the cheaper vinyl variety. Several have the inert gas failed / hazed. We really need to replace the windows, but it will be a small fortune.

 

[1SEIACLONE]

Agreed. I’m just pushing back that a 20% increase in assessment does not equate to a 20% increase in property tax. It’s based on the city’s budget more than the value of your house. As long as your percentage of the overall tax base stays the same, any increase in tax bills is because the city is spending more, not because your assessment went up.

But, I can see where a city would use this as an opportunity to spend more. They can still tout lowering the tax levy rate while increasing their budget. That’s what the public needs to be aware of and question new expenditures as you said.

Many towns and cities have to increase taxes because they are getting less funding from the state than what they have done in the past. So they have to either increase taxes or cut services. There is not nearly the amount of fat in most city and small town budgets as many people think. Everyone wants good streets and sideways, the problem is many do not want to pay for it.

 

[BCClone]

SIAP. I am a lawyer and do real estate work.

Do NOT skip the title opinion. You’d rather know now that you have clear chain of title.

Odds are there are no issues, but if there are issues, it’s much easier to either make sure it’s fixed now (or you walk away).

Most states just have you get title insurance last I knew. A title opinion, is that, an opinion and there could still be hiccups.

 

[BACyclone]

Most states just have you get title insurance last I knew. A title opinion, is that, an opinion and there could still be hiccups.

When you are buying a house, I truly can't think of a reason to not do both.

 

[trevn]

SIAP. I am a lawyer and do real estate work.

Do NOT skip the title opinion. You’d rather know now that you have clear chain of title.

Odds are there are no issues, but if there are issues, it’s much easier to either make sure it’s fixed now (or you walk away).

100% agree.

 

[BCClone]

When you are buying a house, I truly can't think of a reason to not do both.

When I was a loan officer we just had title opinions. One attorney in town did most, had one blow up (this attorney was bad in every sense of the way but was local and arrogant so a lot of people used him) and it got messy I recall. Spent a lot of time cleaning it up. That’s why I say they are an opinion (an opinion of someone who has read more than most people, but still an opinion) and you are still on the hook if something turns out to be wrong in the title opinion.

 

[trevn]

When I was a loan officer we just had title opinions. One attorney in town did most, had one blow up (this attorney was bad in every sense of the way but was local and arrogant so a lot of people used him) and it got messy I recall. Spent a lot of time cleaning it up. That’s why I say they are an opinion (an opinion of someone who has read more than most people, but still an opinion) and you are still on the hook if something turns out to be wrong in the title opinion.

I've seen this play out a few times in my banking career as well. Things can get ugly, especially if you're arguing with an attorney that made a mistake and will not concede.

A little known fact by most is that Iowa prohibits the sale of title insurance. Title insurance is required for "investor" loans like FannieMae, Freddie Mac, etc., so Iowa came up with Title Guaranty, which is Iowa's exclusive "title insurance" provider. Title Guaranty commitments are mostly issued by attorneys anyway, so they are typically involved.

 

[drmwevr08]

Agreed. I’m just pushing back that a 20% increase in assessment does not equate to a 20% increase in property tax. It’s based on the city’s budget more than the value of your house. As long as your percentage of the overall tax base stays the same, any increase in tax bills is because the city is spending more, not because your assessment went up.

But, I can see where a city would use this as an opportunity to spend more. They can still tout lowering the tax levy rate while increasing their budget. That’s what the public needs to be aware of and question new expenditures as you said.

I may not understand where you're headed but the City's budget responds to assessments and tax income, not the other way around.

 

[BCClone]

I've seen this play out a few times in my banking career as well. Things can get ugly, especially if you're arguing with an attorney that made a mistake and will not concede.

A little known fact by most is that Iowa prohibits the sale of title insurance. Title insurance is required for "investor" loans like FannieMae, Freddie Mac, etc., so Iowa came up with Title Guaranty, which is Iowa's exclusive "title insurance" provider. Title Guaranty commitments are mostly issued by attorneys anyway, so they are typically involved.

Ever known an attorney that will concede they made a mistake?

 

[trevn]

Ever known an attorney that will concede they made a mistake?

No comment. Ha!

 

[CyDawg23]

SIAP. I am a lawyer and do real estate work.

Do NOT skip the title opinion. You’d rather know now that you have clear chain of title.

Odds are there are no issues, but if there are issues, it’s much easier to either make sure it’s fixed now (or you walk away).

As I understand it, attorneys are actually required to provide title opinions in nearly all Eastern states (the old ACC and Big East states). We’re a little less heavy handed in the Midwest and West, but if it’s important enough to be REQUIRED in many states, then it’s probably important enough to do it voluntarily when not required. Just my two cents.

 

[ghyland7]

Ever known an attorney that will concede they made a mistake?

Just remember, we made the system incredibly complex so that you are forced to hire us to navigate it.

 

[ghyland7]

Most states just have you get title insurance last I knew. A title opinion, is that, an opinion and there could still be hiccups.

Iowa is pretty unique in how we do title work, even compared to other midwestern states.

The point of a title opinion is that it will generally clear title and you do NOT need to get title insurance. You still can, of course, and if it’s a really old commercial property or something it could be worth it. **edit; while technically title insurance is outlawed in Iowa, it still happens. Real estate is messy.

Most other states do not have as stringent of title standards and really on title insurance protections.

If you have a mortgage, there was a title opinion done. The bank typically hires a lawyer to do it. There are tons of lawyers whose entire practice is doing title work for banks/real estate companies.