Thinking about winning a lottery and buying that million dollar house you always wanted?? Think again. Many people don’t realize that real estate prices are still too high and don’t calculate how much real estate taxes they will have to pay every year, a percentage of the buying price.
There is a house in Pacifica I had my eye on, beach front, sunny, lots of windows. It is on sale right now for 1,400,000 ($1.4 million). That is the asking price. This year in March, it was sold (to the bank) for $200,000. The rest of the price hike is due to remodeling improvements.
So even if I, all of a sudden, came upon this much money, my real estate property taxes are going to be $12,000 a year. If I owned this house for 10 years, it will add up to $120,000 – that’s another house somewhere in the valley.
Last week in San Francisco, a penthouse was sold for $35 million. That is $35,000 a year in property taxes. In 10 years it will add up to $350,000.
All this property tax money, supposedly, goes to the corresponding county. Money to be spent on schools and services benefiting the community. This, compared to the income taxes, is the larger chunk of all. However, counties claim lack of funds and schools are being closed every year, teachers laid off and libraries downsized.
So where does the money go???
Someone needs to investigate.
Going back to the real estate prices. I would hold out. Don’t buy into it. The banks have us all convinced that the price of the house is this much, using complicated words like appraisal and whatever else. The truth is, they will have to sell the house to someone, otherwise, they are responsible for paying the property taxes as property owners.
Before buying a house, I would check on the following:
1) The market value of the house
2) The land value
3) The previous sale price
4) If owned by the bank, the amount they paid for it and their property tax
5) The prices of the neighboring houses
6) The crime statistics in the area
7) Why did it get sold
Some of this information can be found here, by address: