A note from Bob Arundell:

The SC State Legislature determines to what owners property taxes apply.  During the due and cry when voters were clamoring for property tax relief(Remember California’s Proposition 13?), the SC State Legislature granted resident homeowners an exemption from paying school operations taxes. To replace those funds, the State Legislature added a 1% sales tax that goes directly to fund school operations.

One problem is that the sales tax did not bring in as much money as the property tax relief granted to resident homeowners took away. The local school board looked into imposing what is called an “impact fee” on all new construction to divert some of the cost of building new schools; however, as it turns out, the State Legislature also prohibits school districts from imposing impact fees. The local district also does not have the authority to alter the sales tax rate. Finally, in an effort to send more funds to the poorest school districts in the state, the SC Legislature passed a law that allocated the state’sgeneral public education funds based on the relative “wealth” of each county.  A county’s “wealth” is determined by looking at its total property tax base (i.e. the fair market value of all real estate in the county.) By virtue of its resort, beach oriented nature, Beaufort County was ranked as the”wealthiest” county. As a result, the local school district’s allocation of the state’s general public education funds went from a high of about $35 million to zero last year.

The bottom line is this: The Beaufort County School District is charged with educating about 20,000 students. The only source it has to increase revenues for operations is to raise the tax mill on commercial and non-resident property owners. The good news is that for the coming year, the school district has set the commercial and non-resident property owners at a level that is 10.2% LOWER than the year before! Because property values were re-assessed for the coming tax bills, the school district believes that those whose property values increased by no more than the county average (11.4%) will not have a tax increase for the coming year.

As there are far more “poorer” counties than there are “wealthy” ones, there are not enough votes to change the laws right now. Out of state owners should complain to the U.S. Congressman or Senator about how they are being discriminated for being an out-of-state property owner.

Hope this answers the question.

Bob Arundell

Tax Attorney and CPA

843-785-8040

Here is the latest on our property taxes from my friend and accountant Bob Arundell.  If you wish to contact him or ask him a question, Bob can be reached at (843)785-8040 or his email is bob@mhalawfirm.com

Robbie:

A lot of people came away from a recent article about an adjustment to the School District’s tax mill rate with the idea that their tax bill, when compared to last year’s tax bill, was going up.  THAT IS NOT CORRECT.

The complexity and nuances of public education funding makes it real easy for the average person to arrive at an erroneous conclusion.

I did a presentation to the Chamber of Commerce’s Government Affairs Committee and used a hand-out that I thought you might find useful.  It explains what really happened and why, on average, your taxes did not go up. Click on the underlined link to read more: BCSD – Tale of Two Taxes

Call me if you have any questions.

Bob Arundell

(843)785-8040

Dear Clients, Friends and Fellow Associates~

We asked Cary Griffin of McNair Law Firm to give us a better understanding of closing costs as a buyer, seller or fellow associate.  Cary also put together a reference guide for the costs associated with each community.  Please keep in mind that the transfer fees can be negotiated by the buyer, the seller or split equally.  The closing costs in the links below are all based on a $100,000 average.  If you have a more expensive property, you can  remove the constants and use a multiplier to determine an approximation to your closing costs.  Here is a quick summary:

Click below for Closing Cost Estimates for each:

• Home Closing Costs on Hilton Head
• Villa Closing Costs on Hilton Head
• Lot Closing Costs on Hilton Head Island

*Please note loan fees and prepaid items will add additional closing costs.       

If you have any questions as you review these closing documents, please feel free to contact Cary Griffin at CGriffin@MCNAIR.NET .  Cary has also provided a handy list of transfer fees and plantation dues below.  Simply click on the underlined link for a readable (and printable) list of these fees:

Plantation annual costs and transfer fees:

                                       Plantation Dues & Transfer Fees 2009

 Please do not take a chance on time…the costs are low for what you get.  Come dance on the beach and enjoy life now! 

All the best,

 
Robbie Bunting &
Jane Hyers

Dear Friends, Clients and Fellow Associates~
 
The window of opportunity for trades is not forever.  Trades have flourished in this market because sellers are looking for creative alternatives to reducing expenses or want to move up.
 
The key to a succesful trade is to negotiate the difference.  It really does not matter what the selling prices are once you have arrived at the difference.  This can be established from a recent appraisal or even fair comps from 2 years ago.  The difference is the difference.  Here is a list of trade properties.  Please email me if you have a property in mind that you would like to trade.  Thank you.

1. A 1 bedroom Beachwalk + a four bedroom remodeled home – looking to trade for a ocean oriented rental home or deepwater residential home up to $1 mill. 
2. A 2 Bedroom Turnberry($329) – looking to trade up to a 3/4 bedroom villa in Sea Pines, Shipyard or Palmetto Dunes up to $550,000
3. A 3 Bedroom Queens Grant($349) – Looking to trade up to a harbor or marina view with 3 bedrooms ($600)
4. Leamington Lagoon lot ($729,000) Will trade for a rental home or villa of equal or lesser value.
5. Haig Point waterfront 5BR home($1,895,000) will trade for improved commercial up to $4,000,000. 
6. Daufuskie Oceanfront 3 BR penthouse($1,000,000) Will trade for an oceanfront lot at Bloody Point.
7. A 4 bedroom Palmetto Hall home($639,000) will trade for a 2 bedroom villa up to $350,000 in Shipyard, Palmetto Dunes or Sea Pines
8. Large 1/2 acre lot with private dock ($569,000) will trade for a rental property or commercial property of equal or less value.
9. Brand new 5 bedroom oceanfront Home ($4,995,000) Will trade for an oceanfront lot/teardown or oceanfront villa.  Alternative looking to trade up to 200 unit apartment complex(A or B quality) anywhere in the southeast. 
10. A 2 Bedroom Oceanfront Hampton in Palmetto Dunes -Will trade to a 2 bedroom Wendover, Huntington, Abbington or Captains Cove.
11. A 5 bedroom Leamington home ($1,995,000) – Will trade to an oceanfront/near ocean villa ($700-)
12. A 4 Bedroom Palmetto Hall Home($975,000) will trade for a lot, villa or smaller home under $500,000.
13. A Big Palmetto Hall Lot($250) will trade for a gated home on the Island that is truly exceptional in a gated community up to $1 mill.

You can view many of the above properties by clicking My Listings.  Please feel free to call me if you would like to discuss the process or email me at robbie@robbiebunting.com.  Thank you.

Happy Trading~
 
Robbie Bunting
& Jane Hyers
 
P.S.  Thanks to our great sellers and buyers that are turning this economy around!

Selected Rates as of May 7, 2009:

OUR BUYER BENEFITS

1. You will find a new Listing faster!

You will be contacted or see Properties sometimes before they even hit our Multiple Listing Service and other agents.  Some of the best properties and deals are made quickly in this market. 

1. You will save time!

We know every property, every street and have access to all of the necessary documents that you need to get the right information to make a decision.

1. You will save money!

Our 25 years of negotiation, can help you identify savings including: title insurance, surveys, rental maximization (if chosen), negotiation strategies and how to identify opportunities.  (Sellers pay commission with a published co-op)

1. You Will Get The Help You Need!

Jane Hyers and I are full time and on call every step of the purchasing process. You will find that we love helping you with every detail and are on call from the time you start your search, through negotiation and closing…

1. You Will Love Our Convenience!

We are located in the center of Hilton Head Island on 278 at Palmetto Dunes entry. (M-S, 7:30am-6pm, or Sundays, noon- 6.  We love visitors to share a cup of coffee and our latest properties and best buys.

Robbie Bunting

& Jane Hyers     

                     842-0805 or (800)932-3652                           
Fax: (866)680-1137

islandrealtor@hargray.com

www.robbiebunting.com

Our buyers get a warranty free, but in the past we only covered the buyer and not the seller. With our new program today we can now cover our sellers during the listing period. This is especially perfect for the second home property or older home.

If you have a home or villa listed with us, we now have a new warranty program which offers warranty benefits to you if you are the seller. A home warranty is a service contract that covers the repair or replacement of many of the most frequently occurring breakdowns of home system components and appliances. The warranty fee is collected only at closing and there is no charge if you do not sell the property for any reason. If you would like to find out more about the warranty, contact us! Thank you.

Our Best,

Robbie Bunting & Jane Hyers

Obama Unveils Homeowner Affordability

and Stability Plan

Revised February 24, 2009

President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes.Refinancing Initiative

Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. Therefore, the refinancing initiative in the new plan provides refinancing help for homeowners with less than 20% equity in their homes or who owe more than their home is worth. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth. Stability Initiative

This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.

The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. In addition, the plan includes a third initiative to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.

Many of the plan’s details are still being worked out and will not be announced until March 4, here is an overview of the plan’s main components.

According to the plan, “credit-worthy” or “responsible” homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.

As with the rest of the plan, details about this initiative will be released at a future date—including what, if any, credit score requirements will be included.

The goal of this initiative is simple: “reduce the amount homeowners owe per month to sustainable levels.” To accomplish this, lenders are encouraged to lower homeowners’ payments to 31 percent of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.

Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.

Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify. This initiative also includes a number of additional elements and incentives that benefit homeowners and lenders alike, including:

• Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
• Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.

Supporting Low Mortgage Rates

As part of the Homeowner Affordability and Stability Plan, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability. This portion of the plan will use using funds already authorized in 2008 by Congress for this purpose.The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.Again, the government plans to unveil the final details of the plan on March 4, 2009. For now, you can download a sheet of common Questions and Answers produced by the government at: www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdfI will continue monitoring the plan as new information becomes available. If you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Why Now is Good Time to Buy!

By Beth Hornick

SunTrust Mortgage

Many potential home buyers are waiting to finalize their decision to buy a new home. With news reports of falling home prices and increased foreclosures– it seems smart to wait. According to predictions from Freddie Mac, housing prices are predicted to drop approx 10% in 2008. BUT, if you pull out the “big 4” (California, Michigan, Nevada, and Florida)- the figures revises to less than a 5% drop. South Carolina and the Hilton Head area in particular, is an area with smaller drops in prices when compared to the national average.

Rates are now at near record lows with 30 year fixed rate loans hovering just around 6.00% for conforming loan amounts. Historical comparisons say rates typically drop about .25% BEFORE the election and RISE after .60% the election.

So, what is the best time to buy? Now, when rates are low? or wait till housing prices drop further? Many buyers seem to be emphasizing dropping housing prices. But, waiting for prices to fall can COST you money!

Here are two examples:

EXAMPLE ONE-Assume a mid level purchase price. These are the homes that should drop a MAXIMUM of 5%.

Current Price                                                             $300,000

Mortgage Amount (assumed 20% down)              $240,000

30 year fixed rate of 6.0% P & I payment               $1,438 per month

Assumes a 20% down, 30 year fixed rate mortgage at 6.00% (6.043% APR)

359 payments of $1,438.91 and 1 payment of $1,440.30

Assume 5% price drop                                            $285,000

Mortgage Amount                                                     $228,000

30 year fixed rate of 7.00% P & I Payment            $1,517 per month

Assumes a 20% down, 30 year fixed rate mortgage at 7.00% (7.047% APR)

359 payments of 1,516.89 and 1 payment of $1,516.16

An increase of $80 per month- that’s $28,800 over the 30 years! A 10% loss In this case- the 5% housing price drop COSTS the buyer over 10%!

EXAMPLE TWO- Assume a higher priced home. These are the homes that should drop a MAXIMUM of 10% (factoring in higher loss states– SC drops are predicted to be smaller)

Current Price                                                             $1,000,000                        Mortgage Amount (assumed 20% down)                          $   800,000

30 year fixed rate of 6.5% P & I payment               $5,056 per month

Assumes a 20% down, 30 year fixed rate mortgage at 6.50% (6.513% APR)

359 payments of $5,056.54 and 1 payment of $5,061.33

Assume 5% price drop                                            $950,000

Mortgage Amount                                                     $760,000

30 year fixed rate of 7.50% P & I Payment            $5,314 per month  

An increase of $258 per month- $92,880 over 30 years! A 9.8% loss.

Assumes a 20% down, 30 year fixed rate mortgage at 7.50% (7.515% APR)

359 payments of $5,314.03 and 1 payment of $5,314.45

Assume 8% price drop                                            $920,000

Mortgage Amount                                                     $736,000

30 year fixed rate of 7.50% P & I Payment            $5,146 per month  

An increase of $90 per month- $32,400 over 30 years! A 3.5% loss.

Assumes a 20% down, 30 year fixed rate mortgage at 7.50% (7.516% APR)

359 payments of $5,146.22 and 1 payment of $5,144.38

Assume 10% price drop                                          $900,000

Mortgage Amount                                                     $720,000

30 year fixed rate of 7.50% P & I Payment            $5,034 per month  

A drop of $22 per month- $7,920 over 30 years. A 0.9% gain.

Assumes a 20% down, 30 year fixed rate mortgage at 7.50% (7.643% APR)

359 payments of $5,034.34 and 1 payment of $5,040.59

In this example- housing prices would need to drop at least 10% before it would offset the predicted rise in rates. And 10% was the MAX decrease predicted!

These assumptions also assume a maximum interest rate rise of 1.00% over today’s rates. If rates rise higher or faster than predicted– the cost of waiting to buy will increase.

Another factor to consider is the increased inventory of homes available right now. Buyers have a larger choice of homes than any time in the recent past. But, what about all the foreclosures that the media says are coming up? Again, South Carolina and the Hilton Head area are predicted to have much lower rates of foreclosures than the national averages.

Also consider also what most foreclosed homes will look like. If a home owner does not have the money to make their mortgage payments– will they have the money to continue the necessary upkeep of the home?  And in many cases– there may also be outstanding liens for real estate taxes or Association fees. Trying to negotiate with a lender to buy Bank Owned Real Estate can make the process more difficult and few if any repair items will be done. In many cases, foreclosures are not the best deal out there.

So what should a potentional home buyer do? Buy now and save money!