Dallas Fort Worth Area Homes and Real Estate: January 2010

If you are a home owner in the Dallas Fort Worth area who purchased your primary residence last year and occupied this property on or before January 1, 2010, it is time for you to file your homestead exemption.  Central appraisal districts require this file be received by no later than April 30 in order to receive the homestead exemption for the current year.  Having a homestead exemption could save you hundreds of dollars per year in property taxes.

 WHAT IS A HOMESTEAD EXEMPTION?

A homestead exemption is a discount that home owners are allowed on their primary residence in the State of Texas.  The amount of the discount depends on how much each taxing entity (county, city and school) allow the appraised value of the home to be discounted.  The specific dollar amounts allowed by each entity should be available on the tax appraisal websites which are linked below.   

HOW DO I FILE MY HOMESTEAD EXEMPTION?

Just follow the instructions below for filing based on the county that you reside in (you will need a computer with a PRINTER to print the form).

REMEMBER, THE DEADLINE TO FILE YOUR HOMESTEAD EXEMPTION FOR DALLAS, COLLIN, TARRANT, DENTON, ROCKWALL AND KAUFMAN COUNTY IS APRIL 30TH.

 DALLAS COUNTY HOMESTEAD EXEMPTION FILING INSTRUCTIONS

• Go to www.dallascad.org
• Click the link on the left side that says "Search Appraisals"
• Click the blue link on the top row that says "Street Address"
• Type in your property address.
• A blue link should appear at the bottom with your property address.  Click this link.
• MAKE SURE that YOUR NAME appears as the owner.  If it does not, you should contact the Dallas Central Appriasal District to find out why.  Their number is 214-631-0910.
• If your name does appear correctly, click the blue link at the top left hand side of the screen that says "Print Homestead Exemption Form".
• Fill out pages one and two per the instructions on page three. 
• Sign and date the form and have the form notarized.
• Mail the form to the Dallas Central Appraisal District at the address listed on the form.
• Log back on to www.dallascad.org after several weeks to verify they have added your homestead exemption.  It may take a while for them to add it. 

TARRANT COUNTY HOMESTEAD EXEMPTION FILING INSTRUCTIONS

• According to the Tarrant County Central Appraisal District, they will automatically mail a homestead exemption form to the home owner's address of record.  If the deed was filed by Jnauary 1st, the home owner should receive the deed in late December or early January.
• If the deed is processed AFTER January 1, but the home owner closed prior to January 1, the county says they will mail one as soon as the deed is filed. 
• For full instrucitons, go to www.tad.org, click the link on the left that says "Applications and Forms" and click the link that says "General Homestead Exemption Form".  These instructions should appear, as well as instructions for home owners that did not receive a form.  They will allow a form to be printed online for those that did not receive the form for some reason.

COLLIN COUNTY HOMESTEAD EXEMPTION FILING INSTRUCTIONS

•  Go to www.collincad.org
• Click the link that says "Address" under "Real Property".
• Type in your home address and then click "find".
• Click the blue link under "Account Number".
• Verify your information (name, etc) is correct.
• Scroll halfway down the page and click the link on the left side that says "Homestead Exemption Application".
• Click the gray link with red letters at the bottom of the page that says "Homestead Exemption Form".
• This should bring up a pre-populated form with your name and address. 
• Print the form, fill it out per instructions and mail to the appraisal district. 
• Log back onto the appraisal district site in a few weeks to verify the exemption was filed correctly.   

DENTON COUNTY HOMESTEAD EXEMPTION FILING INSTRUCTIONS

• Go to www.dentoncad.org
• ON the left side under "Resources", click "Homestead Applications".
• Click the box that says "Application For Residence Homestead Exemption".
• Fill out the form and follow the filing instructions. 
• Check to see if the exemption was added properly in a few weeks by logging back on and doing a search by address. 

ROCKWALL COUNTY HOMESTEAD EXEMPTION FILING INSTRUCTIONS

•  Go to www.rockwallcad.com
• Click the link that says "Forms".
• Click the link that says "Homestead Exemption"
• Print the form, follow the instructions and mail to the appraisal district.

KAUFMAN COUNTY HOMESTEAD EXEMPTION FILING INSTRUCTIONS

• Go to www.kaufman-cad.org
• Click "Forms".
• Click "Homestead Exemption".
• Print the form, follow the instructions and mail to the appraisal district.

{ { { MORE FREQUENTLY ASKED QUESTIONS ABOUT HOMESTEAD EXEMPTIONS: } } }

HOW MUCH DOES IT COST TO FILE MY HOMESTEAD EXEMPTION?

IT IS COMPLETELY FREE! (OTHER THAN THE COST OF A POSTAGE STAMP AND THE COST TO HAVE A NOTARY SIGN THE FORM).

IF IT'S FREE TO FILE, WHY HAVE I RECEIVED SO MANY LETTERS IN THE MAIL FROM COMPANIES THAT CHARGE A FEE TO FILE MY HOMESTEAD EXEMPTION?

Because it is LEGAL IN THE STATE OF TEXAS for a company to charge a fee to file a homestead exemption on behalf of a home owner.  However, this basically amounts to paying a company a hefty fee to do something you can do for free anyway.  So if you're getting letters in the mail asking for money to file your homestead exemption, THROW THEM AWAY because I'm going to show you how to do it yourself FOR FREE!

WILL I HAVE TO FILE FOR MY HOMESTEAD EXEMPTION EVERY YEAR?

NO!  Once it is filed on your current home, you will NEVER need to file it again, unless, of course, you purchase another home at some point and make it your homestead.  In that case, you would file for a homestead on the new home and the homestead exemption on your current home would be discontinued.  Home owners are only allowed to have a homestead exemption on one property at any given time. 

BUT WHEN I BOUGHT MY HOME, THE PREVIOUS OWNER ALREADY HAD A HOMESTEAD EXEMPTION.  DO I STILL HAVE TO FILE?

YES YOU DO.  The previous homestead exemption only applied to the previous owner.  The county may have "grandfathered" their exemption to you for the rest of last year, but they should have automatically removed the previous owner's exemption effective January 1, 2010. You will need to file your own homestead exemption before April 30, 2010 in order to receive the discount for tax year 2010.

The Dallas, TX real estate market has remained very resilient throughout the recession and housing crisis.  Below are some real estate statistics and charts for single family home sales in the city of Dallas, TX from December of 2007 to December of 2009. 

The median home price of homes sold in the city of Dallas, TX decreased by 6% from $145,000 to $136,250 from December of 2007 to December of 2009.  The significant movements in this median home price are likely due to the shift in activity on a seasonal basis, plus the changing availability of mortgage products, especially for jumbo loans. 

The most significant decline was in the beginning of 2009 when the financial crisis escalated and many home buyers were paralyzed by market uncertainty, plus the normal decline in sales activity during the winter months.  Overall, the market has remained relatively strong, especially compared to cities in the "bubble states" like California and Nevada, where median home prices have declined by over 50% or more in some markets. 

Although I do not like to post "seasonally adjusted" data because I do not believe it shows an accurate picture of the market, I do think it is very important to compare changes in statistics, such as the median home price, to similar months for different years.  For example, comparing the change between sales from June of 2008 to June of 2009 tends to show a more accurate picture of the market versus comparing June and December figures because of the normal seasonal decline in sales between June and December. 

The average days on market for single family homes in Dallas, TX varies greatly from one month to the next, but is usually greatest in the winter months because of the seasonal slowdown in real estate sales.  The average number of days that homes sit on the market in Dallas, TX actually decreased slightly (by 3%) from December of 2007 to December of 2009. 

This next chart shows the median for sale vs. the median sold price of sold properties in the City of Dallas, TX from December of 2007 to December of 2009.  This data shows that while the median price of homes listed for sale has increased by 64%, the median price of homes that have actually sold has decreased by 6%. 

I believe this to be a direct result of the tougher market for jumbo loan products combined with the incentives for conforming buyers (such as the home buyer tax credit and the Federal Reserve mortgage-backed security purchasing program).  Both of these programs are slated to end in just a few months, which I suspect will result in a reversal of this trend to some extent. 

And below is the data for expired listings in the City of Dallas, TX from December of 2007 to December of 2009.  This shows that the number of expired listings has declined by 19% from Dec 07 to Dec 09, and the overall trend of expired listings seems to be on a decline. 

And the decline in expired listings certainly seems to match the trend we've seen in the total number of "For Sale" properties.  This chart shows a steady decline for the last two years, with a marked decrease occuring over the last year.  In total, the number of single family homes for sale in the City of Dallas, TX has decreased by 28% from December of 2007 to December of 2009. 

This is likely the result of decreased equity that many home owners have, which means they are not able to sell their homes, as well as a decrease in available financing compared with prior years.  This would also seem to reflect the general slowdown in the economy as a whole. 

The total number of single family home sales in Dallas, TX has declined steadily for the last two years, showing a total decrease of 19% from December of 2007 to December of 2009.  Again, this is likely due to the general slowdown in the economy, lack of available mortgage products and also some home owners that may be "upside down" on their current homes and unable to sell. 

And here's a chart that shows the total number of single family homes with purchase contracts in Dallas, TX from December of 2007 to December of 2009.  The trend seems to closely follow the number of closed sales (above), but there is a slight gap that appears to be widening during some months.  The difference in sold homes versus homes that are under contract to sell represents all contracts that have fallen out due to financing problems and buyers who terminate due to other reasons, such as those that are unable to negotiate repairs with the seller.   

This market data was provided courtesy of MarketMetrics.  The data is believed to be reliable but I cannot guarantee its accuracy.   In addition, sales of "by owner" properties, as well as some MLS sales where the buyer and seller opted out of disclosing the sales price are not included in these figures.

In today's market, almost half of the homes listed for sale are distressed sales - meaning they are either short sales or foreclosures.  The percentage varies depending on the city and region, but foreclosures and short sales generally make up a large part of the home inventory in many metropolitan areas in the United States, including the Dallas - Fort Worth area. This will likely remain the case for at least the next couple of years.

And while it is true that many foreclosures and short sales are great homes, buyers should know the possible advantages and disadvantages of entering into these types of transactions. 

Foreclosures and short sales are not the same thing.  A foreclosure occurs when a home owner is unable to make their mortgage payments to the point that they default per the terms of their note.  At that point, the trustee forces the property to be sold at auction on the courthouse steps and the lender places a minimum bid equal to the amount of the delinquent mortgage.  If the lender happens to be the highest bidder, then they end up owning the property (called an REO or "Real Estate Owned" property).  Sometimes the lender will negotiate with the guarantor, such as Fannie Mae or FHA, to take over the task of selling the asset.  Other times, they will keep it on their books and sell it themselves.  A HUD home is a property where the previous owner had an FHA loan, the property was foreclosed and the lender negotiated with HUD to take over and sell the home.  And likewise, a Fannie Mae, Freddie Mac or VA foreclosure is essentially the same situation.    

A short sale occurs when when a home is still owned by the home owner, but the amount of money they owe on their mortgage plus the costs to sell the home exceed the total market value.  When this happens, the home owner usually either has to come up with the deficiency balance in cash or they must negotiate with their lender to accept a payoff that's "short" of the amount they owe.  So a short sale is exactly what it sounds like-a home owner is selling the property short of the total cost to liquidate the home. 

In a non-distressed sale, a home buyer usually just has to deal with negotiating the offer with an individual seller.  For example, if I wanted to sell my house right now, I would hire an agent to market my home and obtain an offer.  Once a buyer came along with an offer, I would instruct my agent to negotiate per the terms I was willing to accept.  I do not have an asset manager or a department of people in my living room tasked with making this decision - it's a somewhat simple decision that I would make quickly and efficiently because it's the only home I have to sell.

In the case of a foreclosure, the seller is usually a bank or asset manager, so the process is often somewhat different.  Some foreclosures do not take much longer, sometimes no longer, to close than a transaction with an individual seller.  It ultimately depends on several factors, mainly the bidding and paperwork process required by the lender.  Often times, the bidding process is very straightforward and efficient (as in the case of HUD Homes).  Other times, it can be a complete beaurocatic nightmare.

In the the case of a short sale, the seller is still the individual who owns the home, but they must negotiate with the lender to allow a portion of their loan balance to be forgiven (written off).  This is the main drawback to short sales - they can take an extraordinary amount of time to close in some cases because it may take the lender weeks or even months to perform all of the internal steps they must complete in order to make their decision.  I've heard stories of extreme cases, some here on Active Rain, about short sales taking upwards of six to nine months to close.  In my experience this is not typical, but they almost always take significantly longer than sales involving individual sellers and even most foreclosures.

For home buyers looking to take advantage of the tax credits and the low interest rates, time is of the essence and this may not be the route they should choose if trying to close as quickly as possible.  Having said that, there are instances where short sales may only take 30-60 days to close.  It all depends on the lender and also whether or not the process of negotiating the reduction in payoff was started prior to the buyer entering into the transaction.

BUYING A FORECLOSURE - ADVANTAGES AND DISADVANTAGES

Possible Advantages:

• Some lenders offer incentives to home buyers purchasing their foreclosures, such as the HUD $100 Down program.  Fannie Mae and Freddie Mac also offer incentives to owner-occupant purchasers, such as reduced down payments and extended home warranties. 
  
• In the case of a HUD Home, HUD may allow certain repairs to be escrowed (rolled into the loan).
  
• Homes are sometimes sold below market value.  In some cases, they may require few, if any, repairs or upgrades.  This is not typical but it does happen in some cases.  It is a myth that all foreclosures are in an advanced state of disrepair. 

Possible Disadvantages:

• Depending on the lender, the transaction may take longer to close.  Lenders often require loan documents to be at the title company far in advance of closing.  Furthermore, inspections may take longer becuase utilities must be turned on in many cases.  Other circumstances may arise that can cause delays. 
  
• Lenders are not required to complete a seller's disclosure on foreclosures, so the buyer must rely on their home inspection, agent advice and intuition to assess the condition of the property. 
• Lenders may require the buyer to sign certain addenda which may supercede some of a buyer's rights contained within the state promulgated real estate contract. 
• Buyers who close late may have to pay per diem penalties, or worse yet, may lose their earnest money and forfeit the contract if they do not close on time.  Of course, this may be the case in any transaction but per diem fines seem to be very common on foreclosures.  Buyers purchasing foreclosures should make sure their lender has the capability to close their transaction in the time required by the seller. 
• The lender will often refuse to make any repairs to the property.  In some cases, such as in the case of FHA loans, the buyer's lender may refuse to complete the loan if certain deficiancies exist, such as foundation problems or other issues that may jeopardize the home owner's safety. 
  
• In cases where a home is in a severe state of disrepair, it may be hard or impossible to obtain traditional financing. 
  

BUYING A SHORT SALE - ADVANTAGES AND DISADVANTAGES

Possible Advantages:

• As is the case with some foreclosures, short sales may also be priced below market.  This depends on a bank's final judgment as to whether or not a short sale would be more of an advantage to them over proceeding with a foreclosure.  Banks do not negotiate short sales for the benefit of home buyers or home sellers - it is strictly a business decision from their standpoint. 
  
• Buyers who are willing to tolerate a long approval process may find they have less competition since many buyers do not have the stomach nor the time to deal with a short sale transaction.  

Possible Disadvantages:

• The seller may not be able to make any repairs, especially since they may already be in a distressed financial state.  The lender will usually not agree to make any repairs either, and may also refuse to pay a portion of the buyer's closing costs.
  
• Not only do many short sales take a long time to close, many lenders also take a long time to physically accept or reject a buyer's offer.  So in the above cases where I mentioned some short sales may take months to close, most buyers do not know whether the bank has accepted their offer until the last minute.  And furthermore, many banks will demand a quick closing after they have let the buyer and seller languish in limbo for months. 
• Buyers stuck in limbo waiting for an answer may miss out on low interest rates and/or the home buyer tax credit.  Banks will typically not lock loans for longer than 60-90 days, and even ones that do will require a premium to lock in a rate for this long.  Add that to the risk of missing out on the tax credit and it may not be worth it to some home buyers.  
• Banks may refuse to honor an agreement if the buyer fails to close within the time required by the agreement. 
• Imagine waiting 30, 60 or even 90 days for an answer....and the answer is "NO".  Buyers in this position must now start from square one and they've lost all of that valuable time. 
• In some rare cases, banks have foreclosed on properties while in the middle of negotiating a short sale.  Sounds crazy, but some banks' left hands don't know what their right hands are doing if you can believe that....

As with anything else in real estate, every transaction is different.  This is not meant to discourage home buyers from attempting to purchase foreclosures or short sales, it is merely meant to show the possible advantages and disadvantages.  I have worked with foreclosure and short sale transactions on both the loan and real estate side, and each one had its ups and downs.  In every case where the buyer was prepared, they were typically pleased with the outcome.  But buyers should be aware of the drawbacks, especially the long waiting periods associated with some of these transactions, mainly short sales.  Buyers who need to close within a certain time frame should always evaluate the risks before beginning negotiations.