Does anyone have a graphic they use to help explain prorating taxes? I know what to do, that is not a problem.

The problem is...

The custom here has been the seller pays the next tax installment due. Because of the huge number of repossessions, the movement in and out of the area, and the buyer's market, more and more buyers are asking for prorated taxes.

When I list a property, I always discuss the two basic ways taxes can be paid by the seller and figure the "projected" net sheet using the higher figure. But they really don't understand it and that is really apparent when an offer comes in asking for prorated taxes. I got to thinking that if I had a graphic, perhaps it would be more understandable. I have spent the last hour trying to come up with a brilliant graphic - I have something, but brilliant it isn't!

Does anyone have a graphic or any ideas?

Thanks,

Betty

The seller isn't liable for the taxes during the time he lived in the home? Wow - I can't see many buyers wanting to pay taxes on the physical months another person lived in the home.

When I was active in Iowa, iowarealtors.org had a page with files, and one was a detailed explanation of the taxes. Don't have access to it now, being in Arkansas, but you might check your state association website.

That's very different. And customs do change as the market changes. For instance, here we have a local transfer tax on the sale of a property. That's just about always the seller's responsibility. There was a period of time, though, where buyers were willing to pay it and sellers were able to ask it.
Also on taxes, basically taxes here are paid ahead, twice a year. So if you buy a home in April, you are responsible for the next two months' taxes and the seller gets that amount back from escrow.
We always ask for prorated taxes, but I guess here that means something else than there, since the prorated taxes means money coming back to the seller.
--A

The best way to explain prorated taxes is that you pay taxes on the number of days that you own the home. Seller pays the amount from January 1 to day of closing, buyer pays the amount from day of closing to Dec. 31. They seem to understand that. If the tax bill is not payable yet, the buyer gets a credit and owes the bill when it comes due.

Agree with all the above - and I do know how to explain it; I'm just looking for a visual to illustrate it.

We are in a transition mode here - some offers come in asking for proration (the way most of the world does it) but most still come in just asking the seller to pay the next installment.

Perhaps I'm making too much of this, but when doing net sheets for offers, there is usually quite a difference between the two methods. To compound the problem, most agents don't understand proration other than the fact that the sellers lose and the buyers gain!

Added to that, my last closing was on a repo (my listing) that was closing at a bank (not the usual practice). I got the HUD statement and neither the commission nor the taxes were on it! Believe me, I was on the phone immediately! Got the commission taken care of easily; but he had no idea how to prorate taxes. I had to do it for him!

So, as you can tell, it's not only clients who need a visual - most of the real estate community would benefit from one, too.

Any help with a graphic? I know part of this comes from my years as a special ed teacher and consultant - a picture is worth a thousand words!

Thanks,

Betty