An Explanation of Property Tax Prorations in Escrow

This from C V Escrow:

One of an escrow officer's simpler jobs is calculating the amount of property tax that is payable by the buyer and the seller on any given transaction. One of the tougher jobs can be explaining to the buyer why they may get an official property tax adjustment months after the sale is done .

PROPERTY TAX DEFINED

Every property gets assessed by the county assessment office every year, establishing the amount of tax due on that property. At the time of a sale, it's a simple matter for the escrow agent to find out the property's tax for the full year, and apportion the correct amount to the seller for the year to that date, and the right amount to the buyer for the remainder of the year. For example, the property tax of the year is $1200.00, and the transaction closes on May l. The seller pays $400 for the first 4 months and the buyer pays $800 for the last 8 months.

SALE TRIGGERS ASSESSMENT

The complication arises because a property sale triggers a new assessment. Thus assessment happens according to the schedule and timetable of the assessment office; this means it could happen months after the transaction has closed, when the buyer has long since thought the sale over and done with.
When this happens, the property has a new assessed value-and a new tax burden-retroactive to the date of sale. It might be more or less than what the buyer paid on the closing statement, but chances are good that it will be different. Therefore the assessment office will issue an adjustment notice. If it 's a tax increase, the buyer needs to pay more. If it is a decrease, each county handles the situation differently. Check your county's procedures.
That is why , in an appreciating market, a buyer can get an additional tax bill, months after the sale, when they thought it had already been covered. And that is why, in a depreciating market, the potentially reduced taxes on the home cannot be determined and applied at escrow.

Home prices edge up

According to the L.A. Times on June 18, 2009, Southern California median home price rose slightly in May for the first time in nearly two years. But the increase was more reflective of a change in the types of homes sold than an end to falling values, a real estate research firm reported Wednesday.
The $249,000 median price in May was up less than 1% from April's $247,000 figure, and marked the fifth-straight month the median has held at roughly $250,000, according to DataQuick.
The modest rise reflects increasing purchases at the high end of the housing market, where sales have been virtually frozen. For much of the year most of the home sales have occurred in the low end of the housing market, with banks unloading foreclosed properties at deep discounts, dragging the median price down.
As more sellers get realistic, more buyers get off the fence.
Some counties fared better than others. Riverside County is still flat at a median of $290,000.

Kitchen Heat

Stainless steel appliances, granite countertops. Not long ago these were the hottest kitchen features. But now they're expected and practically standard. What are the next major trends to keep an eye on?
According to recent National Kitchen and Bath Association survey of more than 200 kitchen designers, cherry and maple cabinets, quartzite countertops and custom -paneled appliances are hot. Where oak cabinets were once the must have, more than 75% of survey participants now report using cherry and maple, followed by paints and exotic woods.
Although nearly all designers believe stainless steel is still the most popular appliance finish, 77% say that custom paneling on appliances is becoming more common. Granite is still the most frequently used countertop material, but 65% of designers report using more quartzite, another durable stone material.
One thing that hasn't changed is the trend toward bigger, more open kitchens that accommodate more than one cook and serve as more than just a place to cook.

Sun City Palm Desert Stats for May 2009

As of June 1st there were 146 active listings from $181,138 for a Christofle to $939,000 for a Provence on the golf course.

There 18 pending sales from $184,900 for a California Casual to $535,000 for a Regent and former model.
Of the 18 7 were under $300,000; 5 between $300,000 and $400,000; 4 between $400,000 to $500,000 and 1 at $535,000

There were 20 closed escrows from $167,000 for a California Casual to $675,00 for an expanded Monaco on the golf course.
Of the 20 9 were under $300,000; 5 were $300,000 to $400,000; 3 between 500,000 and $600,000 and 1 @$675,000.

If you have any questions, don't hesitate to comment or call me direct.