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Rhett Damon, Other/Just Looking in Chicago, IL

Chicago's Property Transfer Tax was just raised to one fo the highest in the country and too often Buyer's

Asked by Rhett Damon, Chicago, IL Wed Feb 13, 2008

Agents are not educating their clients in advance of closing. Is this ever an issue in your markets and do you agree with me that it's our job to inform them?

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11
Rhett,
I blogged about this issue twice last week. To answer your question, yes it is the realtor's role to edify his or her client as to a ballpark figure for closing costs. You have the transfer tax that just went up 40% to $10.50 per $1000 of purchase price, attorney fees of $500-$750, inspection of roughly $300, several months of assessments if it's a new construction, you have title insurance and any costs associated with the mortgage. I think, though, that you are guising personal anecdote as fact when you say that "too often buyer's agents are not educating their clients in advance of closing."
3 votes Thank Flag Link Wed Feb 13, 2008
i have had several clients ask me to move their april-closing contracts up into march to avoid the tax.

got a call from one such call from an agent this week (actually a really good one at at that) . asked him if his buyer was trying to beat the tax increase. he answered - oh, that went through? so clearly, not everyone knows, or advises their clients

as for the whinning about the tax increase itself, i ask my colleagues:

where were you earlier this winter (or summer or fall) when the deal was being cut in springfield? the state legislative bail-out included this tax increase and it was pretty much forced on the city council. its not like the aldermen had any choice (and yes, i AM loathe to defend them on this). they are being scapegoated

---- unless of course one of you out there publicly came forward with a better solution... which i would be very curious to hear about.



no - i do not like the tax increase (or increased title company charges or lender charges or property tax levies, or broker administrative fee increases either) but we live with all of them as well, and seem to still be making a living...
1 vote Thank Flag Link Sat Feb 23, 2008
Yes Rhett. It's our responsibility. It just passed two weeks ago and every agent I've been speaking with is fully aware and informing their clients. I'm guessing you ran into sombody who isn't. I can't imagine a buyer's agent NOT informing their buyer. What happens at closing "Oh, by the way, you owe an extra $4,500?" That would go over well. I attached a post in my blog about it and I also have another blog post with a list of what transfer taxes are the responsibility of the seller and buyer according to location in Chicagoland. The post also has links to help you find your alderman so you can vote "NO!" to such increases in the future. Get the word out. April 1st taxes go up 40% to $10.50 per $1,000 spent and are the buyers responsibility. If you're closing just after April 1 look to see if you can move your close date.
1 vote Thank Flag Link Fri Feb 22, 2008
If the tax is truly $10.50 per $1,000, it's still half of New York's!

Manhattan is a wacky situation because RETT is traditionally paid by the seller except in cases of new construction, and buyers of new construction condos in New York are generally so hot for them that it doesn't make a difference.

ali
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Alison Rogers
author, "Diary of a Real Estate Rookie"
Insider Real Estate Tips with a Twist of Humor: http://tinyurl.com/2ag28z
Web Reference: http://tinyurl.com/2ag28z
1 vote Thank Flag Link Thu Feb 14, 2008
Yes. In February they passed the $3/$1,000 increase to the buyer. A month later they reversed it to the seller. So now the buyer pays a grand total of $7.50/$1,000. The seller has the $3/$1,000 to the city and an additional $1.50/$1,000 to the county and state. Grand total for the seller including the new city tax is $4.50/$1,000.
0 votes Thank Flag Link Mon May 12, 2008
I always educate my clients, whether buying or selling and the costs they will incur in a transaction. I have gone on way too many listing appointments where there were agents in before me and they never educated the seller on all of the costs. The sellers thought the only thing they paid was the commission. It's so much easier to let everyone know up front what they will be paying for instead of 2 days before closing.

I know the transfer taxes went up in the city, but I thought they were all paid for by the seller. I understand that it's $7.50/$1000 buyer and $3.00/$1000 seller. Is that right?
0 votes Thank Flag Link Mon May 12, 2008
I agree. It also good to keep up to date. Especially with each and every city. Also, if our responsibility to check and see if some cities require an inspection before the closing.
0 votes Thank Flag Link Sun May 11, 2008
It's definitely the real estate professional's job to stay on top of current events, especially those new rules or taxes that have a direct effect on our clients. I've also had many client's looking to move their closing from April to late March because of this. However, I have been able to successfully negotiate seller credits/rebates to the buyer's for closing costs and pre-paid items. This seller credit can help offset the additional charge to the buyer and sometimes cover most or all of their total closing costs. In this market, it's savvy for seller's to accept offering these credits if the overall purchase price (and their bottom line) is satisfactory. Also, make sure your buyer's lender is on board with having seller rebates on the settlement statements. Call or write me anytime for assistance!!!
0 votes Thank Flag Link Mon Feb 25, 2008
Of course its our fiduciary duty if we have the knowledge, but the question is how many agents have the knowledge.

April 1 or later they go up, fyi...
0 votes Thank Flag Link Fri Feb 22, 2008
The increase is to fund CTA pensions. It is definitely an issue that should be raised with buyers - and sellers at this point. As part of the total cost of buying and selling a home, I believe it is important to review the expected costs associated with the transaction. In light of current market conditions, I am encouraging my buyers to ask for the sellers to pick up some if not all of the closing costs including the increase in the transfer tax.
0 votes Thank Flag Link Thu Feb 14, 2008
No doubt you will get alot of answeres on this question. I wonder if the city of chicago will spend the money wisely..........
0 votes Thank Flag Link Wed Feb 13, 2008
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