Tim's Atlanta Real Estate Blog

I like a good deal and Publix has a really good deal this week.  Hopefully the Publix in your area is running it too.

Just buy $25 in groceries and you can buy a $50 gas card for only $40.

Think about that.  That's 20% off gasoline.  If you are paying $3.49/gal that means that it would be $2.79/gal.

They ran this special a few months ago and I tried it out to see if there were any catches.  It was really simple and easy to take advantage of.

I'm going to use this along with the specials they have this week.  I like Fiber One cereal or Raisin Bran.  They are having specials on both. Fiber One is only $2.50/box instead of the normal $4.39.  Raisin Bran is Buy One get One Free.  So if I buy ten boxes of Fiber One for $25 I'll save $10 on gasoline.  That makes each box of cereal only $1.50.  That's a pretty good deal. 

So check out the specials this week and use them in conjuction with the gas card deal.

I think I might actually buy a year's supply of cereal and get as many $10 off gas cards as possible.  It's not as if I won't need to buy gas throughout the year.

On Thursday morning CBS News had a story about the Republican Primaries from New Hampshire.

You can watch the whole video below.  But this screen shot says it all.  There's a candidate that they didn't include in the results of a poll that they showed.  This candidate was in 2nd place in this poll with 14%.  This candidate came in a strong third in Iowa with 22% of the vote vs. 25% for the two winners.

Watch the complete 3 minute news report.  They do not mention this candidate's name nor show any picture of him.  But they do show some video of Rick Perry who is not campaigning in New Hampshire and they do show some video of Michelle Bachmann who dropped out of the race the previous day.

It's not like this guy isn't attracting huge crowds in New Hampshire.  Here are two events that he had there.  That's a lot of people. It would be hard not to notice such large crowds.

So it makes you ask the question.  Are they incompetent or do they have an agenda and want to try to do what they can to keep this candidate from succeeding?  Remember, in the last debate that CBS hosted, they let this guy speak for all of 89 seconds during the entire 2 hour debate.  Is there a pattern here? 

The bottom line is, what else aren't they telling us?  Keep that in mind everytime you watch these "legitimate" news organizations. 

P.S.  CBS isn't alone.  Here is a post I did about ABC News distorting the news about an event this guy did.  My mission is to keep track of these stories in order to expose the lies and distortions that they put out.  Once enough people become aware of this stuff, maybe they might feel compelled to give us the truth.

I spent the day yesterday with an investor couple who are looking to buy a few more investment homes.  They like buying $70,000 homes that take about $5000 to clean up and then rent out for over $1000/month. They have been successful with a few that they bought earlier this year and are ready to pick up a few more.

They picked out 22 homes from the daily updates that I set up for them to receive.  The day before I set up the tour with calls to the agents or the sellers.

The homes were spread out quite a bit, from Sugar Hill to Lawrenceville on down to Snellville.  We traveled a total of 65 miles.

I met them at the first one up in Sugar Hill, then they followed me to the second one in Lawrenceville where we parked their car and all went in my car from there on.

Many of the homes were either short sales or foreclosures.  Unfortunatley, many of the foreclosure homes didn't have good pictures.  It was amazing on a few.  They were really torn up and a mess but not a word or picture saying how bad the condition was. 

I took note of the time and milage just to give you an idea of what is possible when you are organized.  I didn't tell the buyers that we were on any kind of schedule.  I wanted them to take the time that they needed.  If we didn't hit some horrible traffic between #18 and #20 we would have completed the tour within my standard time frame of allowing 15 minutes per home.  Instead, we averaged 15.6 minutes per home.  Not too bad considering that the homes were spread out quite a bit.

This is just another example of how my 12-12-3 system  works.  That's where I recommend that a buyer see 12 homes in 3 hours two days in a row and then make offers on their top 3 picks. 

 This morning they emailed me their t op 4 choices.  I sent them the comps for each and how much the rents are for those neighborhoods.  We'll make offers and see which ones we end up with.

I just updated my Atlanta Market Stats with the latest data from November.

Prices have continued down but volume has formed a noticable upward trend. 

Below is my 12 month weighted moving average for single family detached homes for the entire FMLS area.  We clearly are experiencing a double dip in prices.   Which means that we must be nearing the bottom.  The pick up in volume seems to indicate that buyers are taking advantage of the low prices.  Volume is back to where is was in 2003 while prices are back to where they were pre-2000. 

Unfortunately, market stats are always looking at what has happened in the past.  These numbers are already almost a month old.  Case-Shiller stats are 3-4 months old when they come out.  By the time you see the charts turning upwards, you will have missed the bottom. 

For the above chart above to turn up, we'll need to have prices be above $190,000 for about 6 months in a row.  November's average price was $165,000.  The point is that if you are waiting for that chart to turn up before you buy, by that time current prices will already be quite higher than they are right now.

Life's a gamble and anything can happen.  But it looks like we are well into the double dip.  I haven't heard any talk of a triple dip so it just might mean that we are near the bottom.  If you lock into a 30 year sub 4% loan at these prices I think the downside risk is getting to be very small. 

Real estate is very local so this overall picture of the Atlanta market might not represent what's going on all over the Atlanta area.  Go to my main website where I have more charts for 37 specific market areas around Atlanta.  There are also Absorbtion stats for all of the areas showing sales in the different price ranges.  Some areas might have a 1 month supply of inventory under $100,000 but might have a 24 month supply of inventory above $1 million.

This post isn't about politics.  It's about being able to trust what you read in the main stream media.  

ABC News is regarded as a very respectable news agency.  I want you to read the story below.  See what kind of picture it gives you.  Fortunately, CSPAN was there taping the event that was reported on.  To save time, just start watching the video at the 25:40 mark.

CSPAN filmed the whole event.  They don't do editing so you can see the whole scene from start to finish. 

Did this ABC reporter attend the same event? Think about this next time you read the news or watch it on TV.

ABC report:  Ron Paul Attacked for Views on Health Care.

Ron Paul’s views on health care came under fire tonight at a campaign stop in New Hampshire, where his position on eliminating Medicaid was met with open hostility from the audience.

Paul has called for the eventual elimination of Medicare and Medicaid and has suggested that charity hospitals should pick up the slack for the uninsured. That view got one woman in Manchester up in arms.

“Thirty three percent of the children in the U.S. are on Medicaid and another 10 percent are uninsured,” the woman said. “You have offered charity by doctors as a solution to this. Do you really think that 43 percent of America’s children will be taken care of by charity?”

Paul said that his current budget preserves the program, but it would eventually be phased out because of the unsustainable cost. Paul added that when he worked in a charity hospital in the 1960s nobody was turned away.

“I really want to promote these medical savings accounts so people can put their money aside and get it off their taxes, and buy their own insurance and pay cash to their doctors,” Paul said.

As the congressman was finishing his answer, another woman in the audience shouted, “What about the 43 percent?”

Paul, seemingly taken off guard, shot back, “You mean when? Right now?”

“I described this transition,” Paul responded over the voice of the woman.

“Why not look at how the country looked before 1965. Maybe it wouldn’t cost so much,” Paul said.

Paul’s voice then picked up as he stared at the woman and acknowledged that his own plans may seem “cold hearted,” but he is ultimately trying to save the country from financial ruin.

Now watch the CSPAN video .  You can start at the 25:40 mark.  Does the reporting reflect what really happened?  How do they distort other events? 

I'm sure you've heard of 9-9-9.  Herman Cain's catchy name for his tax proposal.

It inspired me to come up with a catchy name for what I've been doing for the 12 years I've been a buyer's agent.

I call my system the "12-12-3 Buyer Plan"

Quite simply, I want you to see 12 homes in three hours on day one. Then see another 12 homes in three hours on day 2. Then make 3 offers on your top three at the same time and let the sellers compete for your business.

It's Bold.  It allows you to be Decisive. It brings Clarity to your decision.

You might start with a pool of maybe 50 possible homes.  But through satellite views and pictures you can narrow it down to 24 homes.  Send me your list and we'll set up two efficient home tours where we'll see 12 homes in three hours on day one and then see the other 12 homes in three hours on day 2.  At ten minutes per home and a 5 minute travel time between homes, you can easily see 4 homes per hour which translates into 12 homes in 3 hours.  Some homes will be eliminated in just 2 minutes, some will require 15 minutes.  During our transit from one home to the next we'll talk through the pros and cons and rank it compared to the others we have seen. If needed, we'll go back to see your top three at the end of day two.

Don't kid yourself.  Pictures help a lot but they don't provide some important details that might be key to your decision.  You have to go see the homes in person. 

• Pictures don't tell you how moldy the basement smells.
• Pictures don't tell you how much privacy you have on the deck
• Pictures don't tell you how dark and dreary it might be in the middle of the day
• Pictures don't tell you the size of the garage
• Pictures don't tell you the details of the floor plan
• Pictures don't tell you the size of the rooms

When in doubt, let's just put it on the list and let's go see it.  If it's not "The One", we'll just turn right around and move on to the next.  It's not a big deal.

Also, don't rely on the tax records for accurate square feet numbers.  I've seen many times where the size is way off.

I suggest you make three offers at the same time for a few reasons.

• You don't want your #2 and #3 choices to be gone if your #1 choice doesn't work out.
• It might make the sellers more motivated to get to their bottom line quicker
• It positions you as someone who knows the market and has other options
• It's an easy way to find out who's most negotiable in the shortest amount of time

The quickest and most direct way to find out who is most negotiable is to put an offer in front of them and see how they counter.  Then, the best way to see if that is really their bottom line is to be ready to walk away.  Having three legitimate possibilities puts you in the driver's seat.

Maybe the first home that we see will actually  be "The One".  But do you want to be second guessing yourself forever?  There's really no harm is playing it out and seeing the other 23 homes.  If nothing else, you'll feel more confident that you are making the right choice.  You'll be more educated on the market.  We're only talking about spending 6 hours looking at homes. 

Some agents will say that I'm crazy.  They'll say that they are trained professionals who can listen to your needs and therefore can show you just a few homes that are right for you.  I've worked with hundreds of buyers and I just don't see it happening that quickly.  What I see when buyers see just three or four homes before deciding is fear and doubt.  I also talk with buyers who are moving up to their second home who say that they wish they would have seen more homes in order to get what they really wanted.  Instead, they were rushed and made a poor buying decision.

Maybe even after seeing 24 homes we still won't find "The One".  No problem.  We'll set up a listing alert for new listings coming on the market.  You'll already have done your homework and probably will realize a good deal when you see it.  Sometimes the screaming deals require you to offer full price, or more.  If a home worth $200,000 comes on the market for $150,000, getting it for $155,000 would still be a really good deal.  But would you be prepared to do that if that was the only home you saw?  I don't think so. So educate yourself on the market and don't put blind faith in your agent.  You are the one who will be living there for a long time so don't let any agent rush you into making a decision.

If you want to work with an agent who isn't afraid to show you as many homes as it takes, an agent who isn't afraid to submit a few extra offers, then give me a call.  I'd love to get started with you.

Since surveys aren't required by lenders anymore, I have difficulty trying to convince buyers of the importance of getting a survey.  It's been especially difficult in the past few years when most surveyors seem to be charging close to $500. 

I'm so excited about finding Brendan Blake of Blake Engineering and Land Surveying.

The quality of the surveys and the quick turnaround times are the real value.  I've seen so many surveys where it's almost impossible for anyone to decipher what they mean.  Brendan has everything spelled out and provides incredible details on the survey. 

He also does rush orders at no additional charge.  That's so important when you are racing to meet due diligence deadlines.

Brendan specializes in residentlal properties but also is well qualified to do large commcial projects such as sites for WalMarts and such.

I did a quick interview with Brendan in order to give you a quick personal introduction and let him speak for himself.

Don't let your buyers not do a survey.  At only $325, there's no reason not to.

A question I get asked a lot is about how property taxes vary from county to county or city to city.

Does it really make much of a difference if you live in Sandy Springs vs. Atlanta even though both are in Fulton County?

Can I save money by living in East Cobb or Dunwoody?

If you are talking about a normal owner/occupant home, it's not a straight forward issue that can be answered by just comparing millage rates.  The different homestead exemptions that are offered in different localities make the caluculation a little more complex. Homestead exemptions have a larger effect on the lower end of the scale and becomes less of an effect on higher priced homes.  So it really depends on what price range you are looking at.  Then, throw in a varying HOST (Homestead Optional Sales Tax) credit in DeKalb County and it really gets complicated to make comparisons.

But never fear, I have created an online property tax calculator that allows you to compare property taxes in 44 taxing localities around Atlanta.  Just enter the price of a home, and click a button and it will give you the property taxes in 44 different areas.  It calculates the taxes with the standard homestead exemption and also the taxes without a homestead exemption.

Atlanta Property Tax Calculator

For every city or county, I have a page that has an interactive online spreadsheet that I have worked into the calculator.  It also has a real tax bill for comparison purposes so that you can see exactly where the numbers are coming from. 

Dunwoody Property Tax Calculator

Sandy Springs Property Tax Calculator

Cobb County Property Tax Calculator

City of Atlanta Fulton County Property Tax Calculator

To make it easy to quickly compare these four areas, I created a chart that shows you how the taxes vary as the price of the home goes up.

As you can see, up in the million dollar range, the city of Atlanta is more expensive and Cobb County is the lowest.  Sandy Springs and Duwoody are in the middle.

Below is  the same chart but with a close up look at the lower price range.

Here you can see that when you get under around $170,000 the city of Atlanta actually has the lowest taxes.  This is where you see the large $30,000 homestead exemption come into play.  In the city of Atlanta, the $30,000 homestead exemption is also used against the school tax portion of the tax bill where as it isn't in Sandy Springs.

Dunwoody is probably the most complicated when it comes to trying to figure out your property tax bill.   I have a sample of a bill to show you how it's all broken down.

It's not as easy as the standard equation that you normally see:

[(Fair Market Value X 40%)-homestead exemptions] X millage rate/1000

 If you use that equation you're going to be off.  After studying several tax bills and talking with some people at the tax commissioner's office, I think I have all of the pieces and I hope to shed some light on it for you.

Here are the millage rates for 2011 for various authorities around Dekalb County.

The basic homestead exemption for DeKalb County is $10,000 but then many localities have their own homestead exemptions that reduce the particular city property tax.

Those homestead exemptions aren't applied towards the total amount of taxes.  THe tax bill is broken down into several separate portions and the homestead exemption is only applied to a few of them.  That's pretty normal with most counties and cities.

Also, DeKalb County has a HOST(Homestead optional sales tax).  They have a special 1 cent sales tax that goes towards helping create a bigger Homestead Exemption amount.  Every year they total up the amount that they collect in this sales tax and decide how much to put towards the budget in order to give a bigger homestead exemption amount.  They have to use at least 85% for this.  So you never really know what the homestead exemption is going to be from year to year. As you'll see, this HOST credit is only applied to certain portions of the tax bill. Here's a detailed white paper that gives you more details than you'll ever want to know.

Dunwoody also has a special credit for an additional homestead exemption towards the city portion of the property tax bill.  It's a one mil equivalent to the homestead exemption.  It's pretty confusing but as it was explained to me, you take one mil and divide it by the Dunwoody millage rate of 2.74. You multiply this by the taxable assessment amount for the property and then you add to it the regular homestead exemption, $10,000.  Yes, it makes your mind hurt.

But the nice thing about it is that you can actually go online and find the tax bill for any property in DeKalb County all broken down so you can see how they came up with it.  Go to the DeKalb County Tax Commission's site.  Play around a bit and you can get a detailed bill like I show below.

Be aware that there's a city streetlight tax of 33 cents/foot of frontage.  Also, There's a stormwater fee of $48 and a county garbage pickup fee of $265.  In many other counties and cities, you pay for garbage pickup separately.

Below is a sample bill and a image of a spreadsheet that I made to do calculations for different properties.  It allows me to give my clients a good idea of what to expect in property taxes.

Figuring out your property tax is a bit more complicated than some people make it out to be. 

You'll usually see the simple equation:

[(Fair Market Value X 40%)-homestead exemptions] X millage rate/1000

Guess what. If you use that equation you're going to be off.  It drove me crazy for the longest time.  I looked up the millage rate direct from the Fulton County website. For Sandy Springs they have it at 34.034.  Then I looked up the Homestead Exemption direct from the Fulton County website. The homestead exemption is $30,000. 

Using those numbers and that equation, I never could get the taxes to come out right.  So I called the tax office and found out the fine details of calculating property taxes. 

Those homestead exemptions aren't applied towards the total amount of taxes.  THe tax bill is broken down into several separate portions and the homestead exemption is only applied to a few of them. For example, in Fulton County the $30,000 homestead exemption does not apply to the school tax portion.   Also, the Sandy Springs exemtion is only $15,000, not $30,000.   Unfortunately, the equation is a little more complicated.

But the nice thing about it is that you can actually go online and find the tax bill for any property in Fulton County all broken down so you can see how they came up with it.  But don't go to the Fulton County Tax Assessor site.  You need to go to the FultonCountyTax.org site.  Play around a bit and you can get a detailed bill that spells it all out.

A spreadsheet like I made below is helpful in calculating the tax. 

You find an incredible deal that you can afford but then you see that the property taxes are way too high for you.  They are based on the price that it used to be worth.

The big question is just how much of a property tax reduction will you be able to get with a property tax appeal? 

In the past, it was a big unknown.  A good guess might be 15-20%.   But you would never be able to get it reduced by 50% even though you just bought it for 50% of what it currently is assessed at.  And there was never any guarantee that you would get any reduction.

But a new law was passed last year, SB 346 effective January 1, 2011,  that is a great boon for anyone who happened to get an incredible deal on a house.

Now, the first year of taxes are based on what the actual purchase price was.  So if you bought a million dollar home for $500,000, your property taxes will be based on a value of $500,000.

48-5-2.... the transaction amount of the most recent arm's length, bona fide sale in any year shall be the maximum allowable fair market value for the next taxable year.

Here's a summary with all the details.

So if you bought a house this year, you paid the prorated tax based on the previous tax assessment value.  But at the beginning of next year, you'll get your tax bill notice showing what your taxes are based on now.  If it's more than what the pruchase price was, you can file an appeal and know that at least for 2012, your property taxes will be based on your purchase price.

If you get a loan that requires escrows, you need to talk with the lender about how you can get your escrows reduced to reflect your new lower property tax bill. 

Unfortunately, you need to be qualified based on what the current taxes are, not what they will be.  So this will still stop some people from qualifying for a loan on such high tax homes.

Last night at the Republican debates, Herman Cain directed everyone to his website where he said that he now has a detailed analysis of his 9-9-9 plan.  I was so happy to hear that because previously he had just leaked it out to select journalists.

Being the policy wonk that I am, I went there to read the details.  Warning. His ten page summary isn't the easiest thing to understand.  But I found some really interesting facts.

The report evaluates three separate tax plans and figures out what it would take for each taxing method to work individually.  Then it shows that by combining parts of the three plans he can come up with a nice 9-9-9 plan that would be the best of all plans.

One of the plans that is analyzed is the  "Fair Tax" which he calls a more comprehensive variant of the retail sales tax.  It is so interesting to see the numbers that they come up with.  Remember, the Fair Tax is what Herman Cain says on his website that he eventually wants to get to

"Amidst a backdrop of the economic renewal created by the 9-9-9 Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax."

In his analysis, he says that a straight retail sales tax that could replace all of the other taxes that we pay would actually have to be 40% if we talk about it in terms that we normally use when talking about sales tax.  This is straight from his report.

"Replacing the revenues from our selected taxes would require a retail sales tax rate of 28.6 percent on an income-tax equivalent basis (not shown on table). This means that out of every dollar spent, 28.6 cents is tax.

A retail sales tax, however, is normally expressed as an add-on rate to the before-tax price of the item. An income-tax equivalent tax rate of 28.6 percent means the pretax price of the item is 71.4 cents. To generate 28.6 cents in tax revenue, the stated, or add-on, sales tax rate would have to be 40.0 percent."

And that's with no exemptions for food and medical care. The report goes on to say that if there were exemptions for those items it could raise the sales tax rate by one-half.  That sounds like it could be as high as 60% if those things were exempted due to making it politically feasible.

But wasn't the  Fair Tax supposed to be 23%?  They go on to explain that.  You see, the Fair Tax is what they call a comprehensive variant of the retail sales tax.  They somehow will put a special tax on other things that aren't currently taxed, such as compensation of general government employees.  At the Fair Tax site they explain that where a government provides a service that is free, those government employees will be tax 23% on their wages.

"A more comprehensive variant of the retail sales tax is the so-called “Fair Tax” that adds several special taxes to increase the tax base. Largest is a special tax on the compensation of general government employees and, in some cases, government investment purchases (not considered here). Also subject to tax is compensation in the institution sector and the untaxed services provided by the financial sector."

They say that when expressed as an add-on sales tax, the Fair Tax would end up being 27.1%

"The tax rate comparable to the others would be 21.3 percent, 27.1 percent when expressed as an add-on sales tax."

So there it is folks.  In Herman Cain's own analysis, his ultimate goal, The Fair Tax, would be a 27.1% sales tax on goods and services.  Services include real estate agents, house keepers, lawn service people, barbers etc. 

Does a 27.1% national sales tax have a snowball's chance in hell of ever getting passed?  I don't think so.  What is likely to happen though is that the 9-9-9 plan will stay around and therefore we'll have not only an income tax but a new national sales tax.

Herman Cain actually wrote an article in November of 2010 stating how horrible a national sales tax would be.  I kid you not.

"Giving the administration and Congress another tool to tax us and confuse us is like giving an alcoholic a key to the liquor store with no supervision, only to discover that he locks the door after he is safely inside.

A national retail sales tax on top of all the confusing and unfair taxes we have today is insane! It gives the out-of-control bureaucrats and politicians in denial one more tool to lie, deceive, manipulate and destroy this country."

To his credit, he does qualify it that it would have to be something like the Fair Tax that would eliminate all of the other taxes.  But I think that it's naive to think that we would actually get all the way to the Fair Tax.  It's more likely that we would be stuck with a new federal sales tax and in Herman Cain's own words, that would be "insane".

Million, Billion, Trillion.  Sometimes it's difficult to comprehend such large numbers.  Therefore, our national debt and our federal budget don't really seem real.  A $38 billion cut might actually seem like a lot to a $3.8 trillion budget. 38 is bigger than 3.8, isn't it.  It's difficult to do the mental math and keep the conversions correct in one's head when different units are used in the same discussion.  I wanted to bring those big numbers down to everyday numbers so it's easier to comprehend.

First, here are some national budget numbers:

U.S. Tax revenue: $2,170,000,000,000
Fed budget: $3,820,000,000,000
New debt: $ 1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cut: $ 38,500,000,000

Admit it.  It's tough to see through all of those zeroes.  So let's just remove 8 zeros and bring it down to terms of a family budget:

Annual family income: $21,700.
Money the family spent this year: $38,200.
New debt on the credit card this year: $16,500.
Outstanding balance on the credit card: $142,710
Total budget cuts: $385.

What sort of credit rating do you think you'd have in this situation? 

Would you say to the banker, don't worry, I'm cutting out $32/month.  That's about what my family of four spends when we go out to Chick-Fil-A for lunch.  Oooh, the pain and agony. 

What if my interest rate on the $142,710 loan , 2 year variable rate interest only, is currently at 2%? That gives me a interest payment of $2854.  If it went up to a more normal rate of 6%, my interest only payment would triple to $8562, which is 40% of my income.  How am I ever going to get to the point where I can actually begin paying off the actual loan amount?

Would it be wise to continue to give money to charities and go further into debt?

Would it be wise to continue to give money to some friends so that they continue to like me?

Would it be wise to promise my kids Christmas presents just like in the past?

Would it be wise to keep buying more bazookas to defend my home even though the criminals only have pistols?

Would it be cruel to my kids to bind them to this debt? 

Is it fair to bind my grandchildren who aren't even born yet to this debt?

Before getting too excited about Herman Cain's bold 9-9-9 tax plan, you might want to think through the consequences of how it will affect your real estate business and the industry as a whole.

Do your own research and let me know if you find my analysis to be off.

First, the 9-9-9 plan imposes a new 9% federal sales tax on all new goods and services.  Herman Cain's webpage explaining the 9-9-9 plan doesn't exactly say "goods and services", it doesn't say much at all unfortunately.  But his plan is to eventually transition to the Fair Tax. So on the Fair Tax site it does say "new goods and services".

That's a 9% sales tax on a new home.  How's that going to be handled?  If you buy a new $300,000 home you now will have to come up with an additional $27,000 along with your down payment and closing costs.  Sure they say that there is embedded tax already in everything that we purchase and over time, new house prices will come down.  That's fine if it eventually happens, but until it all works through the system, that 9% sales tax is going to be  a huge tax at current pricing.

Many people are used to paying a sales tax on physical goods only.  But this 9% federal sales tax is also imposed on services.  Isn't what we do as real estate agents a service.  So now a seller not only will pay an agent commission, but will have to pay a 9% sales tax on top of that commission.  For a $300,000  home at a 6% commission, the 9% sales tax on the  $18,000 commission would be $1620.  The seller can raise the price of the home by that much and make the buyer pay or the agent can reduce their commission by that amount in order to keep the commission the same.

Another very important detail about the 9% business tax is that wages are not deducted from the taxable income.  Even if you don't make a profit, you will have to pay the 9% on your revenue.  For example.  Let's say you have an assistant who you are paying $50,000/year.  Let's say that times are tough and you only bring in $50,000 in commissions.  So your profit is zero.  But wait.  You don't get to subtract out wages from your taxable revenue.  Even though you didn't make a profit, you have to somehow come up with $4,500 to pay the 9% business tax on your $50,000 business income.  What are you going to do?  You'll have to reduce your assistant's pay by the $4,500 tax you have to pay in taxes, so your assistant will only be paid $45,500.  So in effect, your employee is paying the 9% business tax.

Your employee will then have to pay 9% income tax on the $45,500 which will be $4095.  If the employee spends what's left, $41,405, they will only be able to spend $37,986 in order to have enough to pay the 9% sales tax ($3,419).

So when all is said and done, your $50,000 that you pay your employee leaves them only $37,986 after paying $12,014 in total taxes.  That works out to a tax rate of 24% for the employee. 

Under the current tax system, a family of four would pay $1963 in income taxes and $7357 in payroll taxes for a total of $9320 in taxes which works out to be 18.6% of $50,000.

Herman Cain has said that his plan has been analyzed by the experts who have confirmed that it will work.  So I naively thought that it would be a simple thing to pull up all the details of his plan so I could take a close look at the details to see how it will affect me and my real estate business.  Guess what?  He really hasn't put out a detailed plan yet so it's really hard to know much about it. 

He does have the basics outlined on his website.  I found it interesting that he says that the 9-9-9 plan is just phase one on the way to the Fair Tax, a 23% national sales tax.  I'm a political junkie.  I watch all of the debates.  I don't think I have ever heard him say that his 9-9-9 plan was the first step on the road to the Fair Tax.  Is it because the 23% sales tax of the Fair Tax is too much for people to swallow? 

The day after the Tuesday debate he finally released some new details about his plan to the media.  Unfortunately it was in an email to a reporter and not made public on his website. So one has to rely on the stories in the news and hope that they are reporting it correctly.  I don't understand why he can't post the details on his website for all to analyze.

But look this stuff up yourself and let me know if I'm off base here and you know something different.

Here's a good article from FactCheck.org that verifies my findings that there just aren't enough details out there to figure out exactly how this 9-9-9 plan will affect various people.  It is far from transparent.

Post Fact Checker.  Some good links to other analysis.

Another big thing to realize is that the 9% sales tax is a one time hit to all current savings.  All the money that you earned and paid taxes on already and have stashed away for future consumption, will now get an additional 9% tax on it when you go to spend it.  Let's say you saved $40,000 of taxed income over the past few years and now want to buy a new car.  Here comes an additional 9% federal sales tax on the income that you spend.  Savers get screwed again.

Herman Cain is a nice guy.  People seem to love the way he comes across as a straight shooter who's not afraid to say how he feels.  But unfortunately, his plan sounds good on the surface, but when you start looking at the details, it turns out to be a lot different than he portrays it to be. I'm all for tax simplification, this just doesn't seem good to me. 

9-9-9 is getting a lot of play lately.  Last night at the Republican debates in New Hampshire Herman Cain was getting it from all sides.

I've been trying to research the details to find out more specifics to see what it's all about.  I have to assume that under this plan, new houses and new cars will have the new 9% national sales tax imposed on them.  So now, in order to buy a new home, let's say $200,000, I not only have to come up with a down payment and closing costs for the loan, I will have to pay $18,000 in a sales tax?  How's that going to work? 

The big thing that I see is that it creates a new Federal sales tax without eliminating the income tax.  Someone asked him yesterday how he can ensure people that the 9-9-9 plan wouldn't become a 15-15-15 plan.  One of his responses was that as president, he would veto any attempt to raise the rates.  That's great, but what happens when he's not president? 

From his webpage on the plan , he says that this 9-9-9 plan gets us a step closer to Phase two, which is the Fair Tax.  It's funny that I haven't heard him talk about Phase Two when he explains the 9-9-9 Plan.   I guess the Fair Tax is a tough sell to many.  People hear about a 23% sales tax and they immediately reject it.  But isn't that a bit deceptive?  If you want to eventually get the Fair Tax implemented, why not be bold enough to come out and tell people what your intent is?  Why disguise it in some clever marketing? 

I'm for the Fair Tax.  I like it because it would abolish the income tax and it would abolish the IRS.  But trying to sneak it through incrementally leaves a bad taste in my mouth.  Creating a new sales tax while still having the income tax and IRS around makes me uneasy. 

I also can't see how it will be revenue neutral.  Herman Cain says that low income and middle income people will pay less in taxes.  So who is going to pay more in taxes?  The rich?  How does that happen?  If they pay 9% in income taxes and then spend all of their money, highly unlikely, the most they'll pay is 18%.  I'm pretty sure that millionaires are currently paying much more than 18% income tax.  So if everyone is paying less, how does it collect the same amount of money?   I'm sure there are various assumptions that they have plugged into some kind of computer models to make the numbers all add up but my simple common sense doesn't see how all the numbers add up.   I can only guess that maybe the extra revenue comes from big ticket items such as new houses being taxed. 

To me, this 9-9-9 plan is a gimmick to try to get to the Fair Tax  without having to educate the masses.  The Fair Tax is too easy to demagogue so they sell it in a different package.  Isn't that how they sold the people on the income tax?  Didn't they start the income tax at only 1%? 

For the record, I wanted to document the genisis of "Occupy Wall Street".  I don't know why so few journalists report how it started and who organized it.  But like the Tea Party, many showing up to protest have their own agendas and reasons for participating. 

It was started by Adbusters and is now taking on a life of it's own.

Wikipedia has a good summary of it's history

According to Adbusters, a primary protest organizer, the central demand of the protest is that President Obama "ordain a Presidential Commission tasked with ending the influence money has over our representatives in Washington".

Some group called ANONYMOUS had a couple of videos out that instigated some to show up on September 17th.

ANONYMOUS seems to be going after the Federal Reserve.  Here is a video they put out in March and one in June.

They have two main goals which I totally agree with:

1) End the System of Political Bribery
2) Break Up the “Too Big To Fail” Banks and the Federal Reserve

It should be interesting to see how these protests play out.  What groups will try to take them over or make them out to something they aren't in order to fit their agenda.

Hermain Cain is putting his spin on who he thinks the protesters are and what he thinks they are protesting but I really don't think he has a clue.  Many protesters really don't seem to know what they are doing and are there because they think it's a neat thing to do.

But I think many know something is wrong with our system but just can't identify what the probelm is so their anger is undirected and vague.  Many then get directed down the wrong path and protest against things that aren't the problem. 

I believe that the crux of many of the problems we face in the economy are due to the corrupt  cooperation between Washington and Wall Street. The Federal Reserve enables both and is at the bottom of it all.  It's all about the money and who controls the money.  Until that system is changed, not much will be different.

The numbers from July, 2011 are out from the FMLS. 

The charts below are for detached homes in the whole FMLS market area.  It gives you an overall view of a large area.  Atlanta is a large area to cover and it has many market areas that differ very much from one another. 

You can't go by county.  South Fulton County is going to be totally different than North Fulton County.

So for checking out the stats for more localized areas around Atlanta, go to my main site at HomeAtlanta.com where I have charts for 37 local market areas around Atlanta.

Our Secretary of Agriculture, Tom Vilsack,  says that food stamps are the best possible stimulus for job creation.

But wait a second.  I thought that Nancy Pelosi said that unemployment benefits are the biggest stimulus for the economy.  She says that it creates jobs faster than any other initiative that you can name.

I think that both programs are needed and am glad that they are there.  But it's the mindset that troubles me.  These powerful and supposedly smart government officials thinking that these programs are a great way to create jobs? 

I wonder where the money for these stimulative programs came from.  Did the money come from a taxpayer?  Then there's a taxpayer who has less money to go out and buy something.  Did the money come from government borrowing?  Then my kids are on the hook for paying it back with interest.

I can't wait to see Obama's jobs program that he says is coming out in September.   With this kind of thinking, let's just give everyone a million bucks to go out and spend.  Maybe make them special bucks that have to be spent in a month or they lose all value.  Before you take that idea too seriously, please think about what money is and where it comes from.  Real money of any value does not come from the government no matter how many people wish that it did.

Last year there was a frenzy of activity and closings in May and June due to the ending of the $8000 tax credit.  One would have thought that it would be difficult for sales in May and June of this year to be anywhere close to where they were a year ago. But guess what.

Sales for single family detached homes in Atlanta in May and June of 2011 rose 9.7% over May and June of 2010!!!  You have to go back to 2007 to get better numbers.

Prices did go down though.  My 12 month weighted moving average shows that prices overall went down about 5% year over year for June.  To me, this says that maybe prices have declined low enough to get more buyers out there snatching up homes at prices they haven't seen for years.  In many areas, prices are back to where they were in 1998.  I've seen some homes sell for what they were bought for way back in 1985!

The best looking chart is in the most expensive part of Atlanta, Buckhead.  Not only is the volume picking up but that rise in the 12 month moving average for prices sure looks promising.

I really like the chart pattern over in area 63, the Lawrenceville area.  This is a lower priced area where prices have dropped around 40% and seem to be still dropping.  But the volume is picking up.  Many investors are seeing some great deals.  One can buy a home for $70,000 and be able to rent it out for at least $1000/month.  It's an area for high paying jobs and an area where high paying jobs are projected to grow significantly.  I think it is an area that has a lot going for it.  Are we close to a bottom?  Unfortunately, once we know we'll have already passed it.

We had a past client who wanted to sell his home this past May and move to a new school district.  Time was of the essence with school starting in just two months.

They got their home is great showing shape and we put it on the market a little higher than we thought it should be.  Netting as much as possible from the sale was key to their moving plans. 

5 days after we put it on the market, we received an acceptable cash offer with the buyers wanting to take possession in three weeks.  My buyers were motivated to make it happen.  They had a contigency plan for this.  They would move their stuff into PODS storage and live with their parents until they found their next home.

We immediately started searching for their new home and they found something they loved that first weekend.  We negotiated a closing date on their new home for two weeks after the closing of their current home.   Things were falling right into place. 

The closing of their current home went very smoothly and they walked out of the closing with a check that they would use to buy their next home which was scheduled to close in two weeks.  It looked like clear sailing.

But that same afternoon after they just closed on their current home and were now in a state of homelessness for two weeks, they received devasting news about their new mortgage that they thought was a done deal.  They were told that they weren't going to be able to get the loan.  Say what?!!!!

My people had wanted to use a good friend of theirs who is in the mortgage business.  Hey, there's nothing wrong with doing business with friends.  His friend the mortgage guy, had assured us all that they were qualified to make this move happen and that there was nothing to worry about.   But now, right after they closed on their home and with all of their stuff in storage, they were told by their mortgage guy that the underwriter rejected the loan.

I've never had a client in this exact situation but one thing I've learned, never panic.  There's always a way.  So I recommended that they talk with another loan officer.  I gave them the number of a mortgage guy who has saved me and my clients several times over the years.  In the past, he had seemed to have performed lending miracles.  But the business has changed and mortgage miracles are few and far between lately.

But guess what?  My guy took the file and somehow got it approved.  We didn't even have to change the closing that was scheduled just 13 days from the day he received the file. Are you kidding me?  How can one company reject a loan and then another company get it done?

Craig Bland performed another mortgage miracle.  I don't know how he did it, but results talk.  I think he might have even gotten my client a better mortgage deal.

If your mortgage guy drops the ball or just can't get the job done, give Craig Bland a call at 678-234-0545.  He's with a great mortgage company, Brand Mortgage.  But Craig has been with several other companies over the years, and it doesn't matter who he works for, he always gets the job done.