Home Buying in 97211>Question Details

Tmk, Home Buyer in 97211

I'm buying a house and the property taxes were advertised at about $1,125. At closing, they are about $3,000. How is that possible?

Asked by Tmk, 97211 Thu Apr 28, 2011

How can a home be advertised at a certain price, with certain taxes and then suddenly change? I'm told that they are going to reassess the property taxes in October of this year, but until then I'm expected to pay $3,000 instead of the advertised $1,125. The lender doesn't understand it either.

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Answers

25
Property taxes are set by county based on value assessed. Property taxes are set for 1 year so it doesn't make lots of sense for these taxes to jump at closing.

You can always check with County assessment and taxation department. I would assume you want to check on zip code 97211 which is in Multnomah county (refer to http://web.multco.us/assessment-taxation). You can check on past years tax records. If you find discrepancy in not advertised according to tax records, you can always have your realtor discuss the matters with listing realtor.

If you find that taxes actually went up, you should review the breakdown of taxes and you will be able to root cause the reason of jump in taxes.

Best of luck!
Manisha Jain
http://manishajain.weebly.com
1 vote Thank Flag Link Wed Jun 1, 2011
I'm sorry to hear that happened! Mistakes happen and the lender only goes off of what is provided by the title/escrow company. I always tell my buyers to estimate when shopping for a residence that you will pay around 1% of the purchase price for annual property taxes. Your lender should of made that clear to you the minute the tax sheet was disclosed to his entity. The positive side of the coin is that the increase of taxes didn't disqualify you from buying that property.
Adrian Gastelum
FirstCal Mortgage
502-308-0142
1 vote Thank Flag Link Fri Apr 29, 2011
Hi TMK:

This should never happen although it is very possible if the home is new construction. The reason for this is the listing agent may have originally listed the property in RMLS sometime last year when property taxes were estimated. If new taxes were not assessed until recently this could explain why this happened.

Otherwise, it is next to impossible for a realtor to enter the wrong property taxes into RMLS unless he or she physically overides the entry. This is because RMLS autofills the property tax section of the listing based on the property tax ID number.

I never like my clients to encounter these types of surprises! The best person to ask about this situation is the escrow officer. The next best source is the listing agent.

Appreciatively,

Patrick
1 vote Thank Flag Link Thu Apr 28, 2011
Tmk: Could it be possible that this home was in an area where the taxes were lowered for 10 years to encourage rebirthing of the neighborhood and the 10 year tax abatement is now up? Another reason for taxes to go up is voter bonds approved such as schools, parks and libraries. This has recently affected property taxes in Sandy Oregon. Possible liens for sewers, sidewalks should have been paid by the seller at closing. But it may also be that you ended up paying for a full year plus past months due give you this total or a combination of the above factors. I would certainly follow through on this and verify all of the information yourself. It is your money that will be saved. Good luck with this one. Joan Bowyer-Principal Broker-John L. Scott
0 votes Thank Flag Link Fri Apr 29, 2011
Interesting. I know that veterans can actually get reduced taxes when they purchase a property. That might be what is happening. I'd definitely suggest talking with your Realtor and see if you can get more information.
0 votes Thank Flag Link Fri Apr 29, 2011
Here's some more information that we dug up:
If applicable, the described property is receiving special valuation based upon its use.
Additional rollback taxes which may become due based on the provisions of the special
valuation are not indicated in this listing.

Do you think it has to do with something the previous (almost previous) owner was doing?
0 votes Thank Flag Link Fri Apr 29, 2011
Property taxes may be a pain over there, however you would be blown away if you seen how long our contracts are, many states the purchase agreement is one page, here in California it's 10 pages plus tons of disclosures, when you close escrow you nearly have a small book, lol. Much success to you!
0 votes Thank Flag Link Fri Apr 29, 2011
Heather -

CA is much easier on the tax side. Here in Oregon there is literally no rhyme or reason for taxes from one property to the next. If it were similar to CA it would be a much easier situation with purchases. Here in Oregon you can have properties on the same block with same floor plan etc that are drastically different for taxes. Our system makes no sense.
0 votes Thank Flag Link Fri Apr 29, 2011
Mark, in California we usually estimate 1-1.25% of the purchase price is what the property taxes will be, escrow also has these notices before the property has closed.
0 votes Thank Flag Link Fri Apr 29, 2011
To a couple of the recent posts - asking the agent or seller to pay for the difference will help in the first year but not in subsequent years.

Heather - our tax people don't work uber fast here. This transaction hasn't closed yet and the property is not likely to be assessed in time for 2011 taxes let alone right at closing. Your state may work differently but in Oregon the county changes taxes in September or October after a contract has been recorded - maybe. More than likely they won't make any changes (if any) until next September or October of 2012.
0 votes Thank Flag Link Fri Apr 29, 2011
Although this doesn't happen all of the time, it does happen from time to time.

You could ask the seller to pay the $2,875.
0 votes Thank Flag Link Fri Apr 29, 2011
This is very common, the current owner's property taxes was probably $1,125 based on their assessed value of the property, however when you close escrow the property tax department reassesses your home value as the amount of what you paid for it, the current market value.

Heather Paul, Realtor
Coldwell Banker
(424)625-1037 or (310)586-0364
0 votes Thank Flag Link Fri Apr 29, 2011
The first thing I would do if I was in your situation is the contact my real estate broker, mortgage broker and the escrow officer and ask that this all be explained to you in detail on how the amount jumped. Keep asking questions until you understand the answer they are giving you.

If after they all look into the situation for you, if the bottom line is that you will truly have these extra expenses then you will have to decide if you want to proceed with the purchase and take on the extra expenses or back out of the purchase. If you back out, make sure you ask if you would lose your earnest money. You can still back out and decide losing your earnest money is worth it to you.

I'm curious, did you use a real estate broker for your home purchase? If so, you have hired them to work for you. Put them on the task of finding out the explanation or if it is a mistake. If you did not choose to work with a Realtor then you may want to consult an attorney to help give you guidance on your options after the lender and title company provide you with their explanations as the increase in taxes. Hope this helps.
0 votes Thank Flag Link Fri Apr 29, 2011
I'd see if you can find out where the listing agent got their information. Chances are it was a mistake. Although it totally stinks, mistakes do happen. All of us can chastise the mortgage person or the Realtor involved but this stuff happens sometimes. I'm really sorry to hear there isn't a more obvious reason that can be remedied.

I'd check wiht your agent and see if they can find out where the information came from.
0 votes Thank Flag Link Fri Apr 29, 2011
One more question -
What can I do about it at this point? I definitely hadn't budgeted this extra expense (having to pay $2,000 more now and with the additional $200 in monthly fees). What are my options?
Thanks again! I'm feeling pretty stressed about this!
0 votes Thank Flag Link Fri Apr 29, 2011
Hi,
Thanks everyone for your responses. Here's a little more information:
House wasn't on the market for very long - maybe a week and was listed in early April 2011. It isn't a short sale or new construction. No major construction has been done on it recently (at least that i know of). Does that help?
0 votes Thank Flag Link Fri Apr 29, 2011
Hi TMK,

Another possible explanation is if you are purchasing a short sale home where the seller has stopped making payments for quite some time. There may be no reserves and a lien against the property for back taxes owed. This type of lien is attached to the property so a future buyer can be responsible for paying them. I have had this happen to clients purchasing short sale homes that were on the market for quite some time. In this case you would be paying back taxes owed as well as the next year's taxes all up front at closing.

But, to echo the others please contact your real estate broker and lender to work this out for you. They can double check the title report, etc. and give you a true explanation that we can only speculate. Good luck! I would love to hear what the answer is if it gets straightened out for you.
0 votes Thank Flag Link Fri Apr 29, 2011
Listing agents don't always have the correct amount listed for taxes when they list a property. Sometimes it is due to the time in which you are purchasing (the property might be showing 2010 information instead of 2011). With it being almost May, that seems unlikely unless the home was on the market for a really long time and the listing agent never updated the information. Typically a loan officer and/or their bank will look up this information fairly early in the process. As a consumer, you are typically given a copy of the preliminary title report - did that show the lower amount? I'm guessing no but you may want to check.

I like where a couple of the other responses are coming from - it could be that a tax deferral of some sort may happen at a future date (like for farm deferral or forest deferral). I do agree that there isn't enough information to determine what has happened or is happening.

With the state of our economy here in Oregon, I would be extremely skeptical of taxes being lowered unless there is a valid reason. Farm deferral, forest deferral - these are things you typically apply for. If the seller split off a lot or something along those lines you may not see any real change. It's not typical for anyone to have absolute certainty of what taxes will be in October when we are still in May. Be cautious and expect that taxes won't change.
0 votes Thank Flag Link Fri Apr 29, 2011
There are some good answers here but you need to elaborate before I can give you a correct one. To be blunt upo front though---you never should have made it to close without knowing exactly what was what. Im a real estate broker but operated a large mortgage company for years. I never had a single borrower get to escrow and find 'surprises'. I wont get into how this could have been avoided, thats hindsight now. Again, without knowing exactly what you mean by 'more taxes', Im guessing it was prorata as suggested by one of the others. Id give everyone here a thumbs up for giving possibilities but we are at a disadvantage without more info.
0 votes Thank Flag Link Thu Apr 28, 2011
TMK: get your Real Estate Broker's and Escrow agent's help on this. They can either rectify the mistake, explain the difference or give you guidance. If this is a special assessment, it should (of course) have been disclosed to you prior to closing. I agree with Patrick that these type surprises are very stressful. I wish you well....jj
Janeese Jackson, Principal Broker
Real Estate Resource
503-709-0802
jj@janeesejackson.com
Web Reference: http://fabulousportland.com
0 votes Thank Flag Link Thu Apr 28, 2011
Not what you want to see at closing for sure!

As Melton said below, this could be due to a "Special Assessment" which govern over improvements to neighborhoods - normally you're going to find this in general upgrades for a neighborhood, such as street lighting, curbs, sidewalks, drainage systems and other items which benefit the community as a whole. If the rise came from a Special Assessment, that is considered a lein on the property and is easily consumed by the buyer. Due to the Bancroft Bonding Act these improvements can be paid for over time, rather than all at once. Once the lien is paid, the taxes drop to whatever the current value is (in your case should be about $1,125.00). That mark of course is decided every year by the assessor and will rise (or fall) accordingly.

The first thing I would do is to find out why the difference came about - when the difference came about - and how much longer it will last. You can do that by looking up the tax history of your property and calling or writing to the tax assessors office. The tax assessor must send notice of any significant assessed value change to the owner of the property, in October - so perhaps looking at last October's records would be where to begin. The owner can file a petition with the Board of Property Tax Appeals, but the deadline for that is December 31, following the October letter. The date for that is now long gone.

You did not say if you went through a Realtor for this purchase. If you have closed on the home you are financially liable regardless of the origination of the fee. Before knowing your next step to take, it would be wise to find the history / truth behind the happening. That knowledge will allow you to better understand your next course of action.

Best of luck to you.
0 votes Thank Flag Link Thu Apr 28, 2011
all of the below are possibilities and so is this - you are closing escrow at a time where you are reimbursing the seller for taxes they have paid -

from closing to June 30th

Depending on your lender you may be paying a full year of estimated tax towards your escrow account -
0 votes Thank Flag Link Thu Apr 28, 2011
Tax assessments are a public record, easily attainable. Just like anything else about the purchase,(SqFt., Building permits) it is ultimately the Buyer's responsibility to verify anything of concern to their satisfaction. I wonder what your source was for the tax data?
0 votes Thank Flag Link Thu Apr 28, 2011
Hello,
Well there are two ways that I have seen this same situation with taxes. Is this a newer home and the taxers are only based on the lot...? Did your property have a special assesment due to having chrismas trees or some other type of vegitation or animals on the property?

Mel
0 votes Thank Flag Link Thu Apr 28, 2011
They were advertised wrong for one reason or another. Was the home sold by a real estate agent or private party? It is always best to get as much info about a property on your own, or have your Realtor do it, rather than taking someone else's word, what was advertised. This could have been found out through tax records or through the title company. I would be asking your agent or title company some questions to find out who dropped the ball.
0 votes Thank Flag Link Thu Apr 28, 2011
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