Property Tax Poll

The votes are in and it looks like we voted New York the highest property tax area, followed by Los Angeles. Dallas and Atlanta received just a couple votes each.

Let's see how are voting compares to reality.

A local appraiser, M. Lance Coyle, MAI www.coyleadvisors.com CEO, Coyle Realty Advisors, put together an interesting study that was published in the North Texas Chapter of the Appraisal Institute's monthly newsletter (see http://www.ainorthtexas.org/newsletters/ (January issue) to see the full paper).

Mr. Coyle calculated the property tax, in dollars and as a percent of the house value ($250,000), for a $250,000 house in 12 metropolitan areas, including Dallas. See below:

Property Taxes for a $250,000 House

City Annual Tax Effective Tax Rate
Atlanta, Georgia $944.00 0.38%
Denver, Colorado $1332.27 0.53%
New York City, New York $2417.70 0.97%
Chicago, Illinois $2681.60 1.07%
Oklahoma City, Oklahoma $2750.00 1.10%
Little Rock, Arkansas $3165.00 1.27%
Albuquerque, New Mexico $3240.00 1.30%
St. Louis, Missouri $3320.39 1.33%
Miami, Florida $3699.66 1.48%
Los Angeles, California $3776.55 1.51%
Dallas, Texas $6139.44 2.46%

You can see that most major cities have a tax rate, as a percent, of around 1% and upto 1.51%, and Dallas is almost 2.5%.

What do you think about this? Is Dallas still an economical place to live and own a house?

Feel free to comment to this post.

Job Posting in Real Estate Program Blog

If anyone is interested in commercial brokerage as a career, check out the posting by SCM on http://realestateprogram.blogspot.com/.

We will be covering brokerage latter in the semester.

Is this a valid contract?

Instructions: Read the facts of the following (an actual, real life) case. Based on your knowledge of contracts from Chapter 6 take a position (either ‘yes’ it is a valid contract or ‘no’ it is not a contract). Indicate your position by commenting to this post, again either "yes a valid contract" or "no not a valid contract" and briefly explain your reasoning. Please, no hedging (yes or no only).

Question: Is this a valid contract?

Case: Jack and Joan Brown made it a habit to stop by the Dew Drop Inn every Friday night after work. Here they would meet their best friends, Sam and Shelly Simon, for an evening of dining, dancing, and libations. One Friday, Jack and Joan came stomping into the Dew Drop, having just received their tax assessment for a piece of bare ground they owned adjacent to their home. “I can’t believe this tax assessment,” moaned Jack. “The county is going to raise our property taxes $400 on that vacant lot because they say it’s worth $20,000! Boy, if we could get that kind of money for it, we’d sell it in a minute.”

Several beers later, Sam questioned, “Are you really serious about selling that lot, Jack? We’ve been wanting to build a new house, and being right next door to our best friends, well, I think we’d be interested in buying it.”

“Like I said,” remarked Jack, “if it’s worth $20,000, someone can have it!”

With that, Sam reached across the bar, grabbed several napkins, and scribbled out a makeshift agreement, containing the full names of the parties, the purchase price, and the legal description of the property, taken from Jack’s property assessment notice. Sam and Shelly both signed the napkin/contract, as did Jack and Joan. They toasted the occasion as Sam handed his check for $20,000 to Jack.

The next morning, Jack called Sam. “Hey, buddy, what shall I do with this check you gave me last night? Should I rip it up?”

Sam replied, “Of course not. We want the property. A deal’s a deal!”

A month later, Sam and Shelly were served with papers announcing that the Browns were suing them for coercing the sale of the property. Obviously, Jack and Joan didn’t believe that a sale had been made.

Business Week Speakers in Real Estate

Business Week will be here in a couple of weeks. March 10 to 14 the COBA will bring a host of different speakers from the local business community. This year, Business Week will highlight the economic, business and civic influence of Glorypark Town Center on the City of Arlington and Tarrant County Region. The keynote speaker will be Yaromir Steiner, CEO, Steiner + Associates, Inc. as the keynote speaker on Tuesday, March 11 (for more information visit www3.uta.edu/coba/newcobasite/dean/newsevent1.html).

Some other important sessions of interest include visits from:

*Greg Bennett, Director of Research for Swearingen (Monday, March 10th from 8 to 8:50 AM Room 241)
*Jeremy Normand, Owner of Jeremy Normand State Farm Insurance (Wednesday, March 12th from 8 to 8:50 AM Room 241), and
*David Karr, Senior Project Manager at Hillwood Development (Friday, March 14th from 8 to 8:50 AM Room 241).

You are welcome to attend any of these sessions. All three speakers will speak about topics relevant to our material in REAE 3325.

Tax Question

What is the "assessment ratio" in Tarrant and Dallas Counties?

Property Tax Calculation

Does everyone understand property tax calculations?

For example, what would be the property tax for a property with an estimated market value of $150,000 (assessor's or tax district's estimation), an assessment ratio of 75%, and the following millage rates: 10 mills for County, 5 mills for library, 25 mills for school district, and 20 mills for the municipality. Also, the owner of this property qualifies for a $6,000 homestead exemption.

What is the assessed value?

What are the property taxes?

What is the value (tax savings) of the homestead exemption?

Comment to this post if you would like to take a shot at this.

quick question

im sure it is mentioned somewhere in the syllabus, but instead of reading it again, does anyone know if we need to know the tvm stuff for any other exams(excluding the final)?

TVM "PASS" List Posted on Class Home Page

The TVM "PASS" list, as of exam 1, is now posted on our website. If you submitted the TVM on or before the day of exam 1, you received 5 bonus point on the first exam (which is included in your score reported on WebCT). If you submitted the TVM on or before the day of exam 1 but failed you did not received any bonus points. If you submitted the TVM on or before the day of exam 1 and failed but resubmitted and passed, you received 4 bonus points (which will be reflected in WebCT shortly). If you submitted the TVM tutorial after the date of the first exam, you will be included in the next list which will be posted after Exam 2.

If you are taking FINA 3313 and are required to complete the TVM, you can show your instructor this website and list.

About TVM points...

How do we know if we received credit for turning it in.

TVM pick-up question...

Student question: I was wondering if i could come by and pick up my TVM Tutorial tomorrow Wednsday. My last class ends at 10:50 a.m. will you still be in your office?

Answer: First of all, remember that I won't have office hours tomorrow. I teach from 8 to 9 AM then I am off to Dallas for meetings the rest of the day. I will have office hours as normal on Friday.

Sanjukta is in charge of the TVMs and she has all the TVM tutorials in her office. Normally, we don't return the TVM but you are welcome to pick it up if you can coordinate with her. Sanjukta might also be able to leave the TVM at the Department office (434 Business Building) where you can pick it up between 9 and 4:50 PM, Monday through Friday.

Exam grading question...

Student question: I was wondering how much is each answer worth and also if I received credit for turning in my Tutorial early. I was just concerned because I made an 66.71 on my test but thought I did better. I will make sure to pick up my scantron from the business building, but just wondering on the actual points earned per problem.

Answer: Your exam score is the number of questions you got correct divided by 28 (the total number of questions). If you turned in the TVM before the exam, then you received 5 bonus points (these points are added to your percent score, for example, if you had 61.71% on the exam and completed the TVM tutorial, then your final exam 1score is 66.71%).

If you turned in the TVM tutorial before the exam and it did not pass, Sanjukta has volunteered to contact you (she e-mailed you on Sunday) and give you a chance to resubmit and fix the problem. If you correct the problem, we will regrade the TVM but the maximum number of bonus points on the resubmission is 4 points. Only one person has resubmitted so far. If Sanjukta has contacted you, please thank her. The most efficient option would have been to just return the TVM to you (without bonus). No bonus for TVM turned in after the exam 1.

The other possibility for bonus was blog participation. The maximum number of blog bonus points on this exam was 2. A couple students received 2 points and several student received 1 point.

Sanjukta and I will be posting a TVM completion list soon. We are just waiting to see if more people resubmit. We wait until Sunday and no longer.

Forgot to mention...

If you would like to pick-up your Scan-tron answer sheet for exam 1, please go to room 434 Business Building (Finance and Real Estate Department office) between 9 and 4:50 PM (Monday through Friday). Our Department administrator Marlene Tanner has your original Scan-trons answer sheets.

WebCT is working and Exam 1 scores have been posted!

If you go to WebCT (www.uta.edu/webct) and log-in with your UTA user name and ID, you should find our class and your Exam 1 score (as a %) posted. Included in your score is any bonus for early TVM completion and blog participation. If you haven't already, please review the Exam 1 audio/video clip found on our course homepage.

(If you are interested in the reason for the delay, here it is...Our 2008 class roster was loaded into REAE 3325 for Spring of 2007.)

TVM Bonus: 10 students received the full 5-point bonus for early TVM submission. Two students turned in the TVM tutorial before the exam, but the TVM grader found a significant problem with the submitted answer(s). Sanjukta has e-mailed these two students (Daniel and James) for follow-up (please check your e-mail).

Exam 1 Review Clip Posted

The class roster has not been loaded into WebCT (as of Sunday afternoon)so I cannot report individual grades but I did go ahead and post a wmv file reviewing the answers to Exam 1. The exam review link can be found on the course home page under the assignments for Week 5 (also, please do not forget about Chapters 2 and 3!). I will post individual scores as soon as possible.

WebCT difficulty...

First of all, I would like to thank everyone for making the exam so easy to administer today. Thank you very much for arriving on time and getting right to work. Also, nice to see you guys in person!

As a couple of you have pointed out (and thanks for bringing this to my attention), I am having trouble loading our class roster into WebCT (looks like tech problem number 2 of the semester).

I have contacted the HelpDesk and they are looking into the problem. However, this does mean that WebCT might not be up until Monday. I will make a new blog post as soon as the grades have been uploaded into WebCT. Thank you.

TVM Blue Certificate Form

If you are turning in your TVM tutorial soon, please don't forget that you must submit a copy of all sections and the TVM certificate form (the original blue form that comes with the TVM tutorial-please see your TVM directions). I cannot accept the TVM without the certificate form (Department requirement!). Thanks.

fyi Student Question... (see you Saturday Morning 10 AM)

Question: Well in the main problem its states that he borrows $300,000 at a annual interest rate of 10.25 for 15 years and then it says further that the loan required 2 discounts points at the time of origination and he kept the loan for the full term. so what would be the effective interest rate?I I've tired to work backwards with the answer that we I have provide but i still can't figure it out

Answer:
First step is to calculate the mortgage payment for a $300,000 mortgage, 10.25% per year rates, for 15-years with monthly payments.

n=180
i=10.25%/12 (I have my calculator set to 1 payment/year.)
PV=300,000
FV=0
PMT=?=-3269.85

Second step is to calculate the points.

2 points = 2% of the mortgage amount
300,000 x .02 = 6000

So, the borrower (mortgagor) actually receives $294,000 ($300,000 - $6,000)

Third step is to calculate the effective yield.

n=180 (the mortgage is held to term.)
PV=296,000
PMT=-3269.85
FV=0
i=.8740%/month x 12 months = 10.49%

fyi Dr. McLean from the CFA Institute will be on-campus today...

All year around, I often get questions about the CFA program. It has been many years since I completed the candidate program and this program has subsequently grown (a lot!) and changed. Well, we have a special opportunity this afternoon.

Today, Wednesday, February 6, 2008 we will have one of the top executives from CFA Institute headquarters on campus. This is the second year that Dr. McLean will visit UTA and he would like to meet as many UTA students and faculty as possible.

To help facilitate this request, I have scheduled a "Meet and Greet" sesssion from 5 PM to 6:20 PM in 609 Business Building. Please stop in at this time to meet Dr. McLean and find out more about the CFA program. See you there!

Exam 1: Saturday, 10 AM in room 241 Business Building

Just a reminder regarding the first REAE 3325d exam this Saturday at 10 AM in Room 241 Business Building.

The exam will cover chapters 1, 13, 14 (I am including the Review Materials for Real Estate packet with Chapter 14), and 15.

This first exam will be 25 to 30 multiple-choice style questions (expect more questions on future exams). Approximately 10 questions will involve calculations (so, bring your financial calculators!).

Please arrive promptly at 10 AM and bring your Scan-tron answer sheet (available at the UTA Bookstore), calculator, pencils, and photo ID (UTA id preferred).

Good Luck! (i.e., luck = study hard)

Two New Clips from TVM Review for Real Estate Packet

Just wanted to make sure everyone knows about the two new audio/video clips posted (today) under the TVM Review Materials for Real Estate (our material that supplements Chapter 14). The new clips cover (1) mortgage balances, points, and amortization tables and (2) problem set 3 review.

Also, note we will not be covering the "duration" and "variance in real estate cashflow" section of the Review packet. In addition, I have the answers to problem set 4 posted on the website but this problem set is optional for our class (extra practice but optional) and not reviewed in a clip.

Mortgage Balance Practice Problem

I have a student who is looking at refinancing her mortgage right now (mortgage interest rates have dropped recently). She is looking to refinance $100,000 mortgage and she is getting mortgage interest rate quotes at 5.5% for a 30-year mortgage with montly payments. As we know, people typically do not stay in the same property for 30 years. She expects to move in 5 years and she would like to know the balance of this loan at the end of 5 years.

What will be the remaining mortgage balance of this mortgage at the end of 5 years?

The easiest way to solve this problem is to use the following rule: The balance of a mortgage at any point in time is just the Present Value of the remaining mortgage payments discount at the mortgage contract rate.

HINT: Step 1 - calculate the mortgage payment. Step 2 - calculate the number of remaining payments. Step 3 - discount the remaining payments back to present value.

Would anyone like to show the answer and step by step calculations? If so, please comment to this post.