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Do secret home sale prices hurt buyers?
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| By Jay MacDonald
• Bankrate.com |
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If you live in a hot real estate market, you may receive
frequent postcards or fliers from real estate agents touting the
sales prices they recently nabbed for neighbors.
In a handful of states, however, home sale prices
are not a matter of public record. In several others, you'll have
to extrapolate the sales price from the transfer tax the state collects
on every ownership change.
"Sales prices are not public information in all
states," says Laurie Janik, general counsel for the National
Association of Realtors. "In most states they are, but
there is a pocket of states that tend to be down in the Southwest
where they are not public information."
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| Consumers best left in the dark? |
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| Realtors say home sale prices are proprietary information best left in their possession. Others argue that suppressing this information leads to a host of social ills, ranging from lost revenue to property tax inequities. |
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All, some or
nothing at all
Sorting the full disclosure states from the nondisclosure states
is no easy task, says Robert Berrens, University of New Mexico professor
of economics. Berrens ran into the problem several years ago while
attempting to quantify the impact of natural elements such as greenbelts
and lakes on home values. New Mexico, at the time a nondisclosure
state, was unable to help him. It subsequently adopted sales price
disclosure in 2004.
"There are shades of gray," he says. "In true disclosure states, the sales price goes right on the deed information that gets filed with the assessor's office and becomes part of the county record. In some states, they'll ask you (the price) and it's voluntary. In some states, it varies by county. It's hard to nail down the list."
Nevertheless, Alan Dornfest, property tax policy supervisor
for the Idaho
State Tax Commission, took a shot at it in a 2003 survey of
U.S.
and Canadian tax assessment techniques.
Dornfest says 37 states now have full disclosure,
six states (Arkansas, Delaware, North Carolina, Oklahoma, Rhode
Island and Tennessee) have transfer tax, and he classifies seven
states as nondisclosure: Alaska, Idaho, Louisiana, Mississippi,
Missouri, Texas and Utah. He qualifies Missouri because parts of
that state, including St. Louis and St. Charles counties, have passed
full disclosure ordinances.
Figuring sales price from transfer tax
"Some states have elements of disclosure and thereby become difficult to classify," Dornfest says. "For example, Arkansas answers 'no' to disclosure, but 'yes' to transfer tax. Since most transfer taxes are calculated as a percent of sale price, they can be used to back into the sale price and therefore are surrogates for disclosure."
Here's how: Transfer taxes typically run between $3 and $4 per $1,000 of sales price. These often attach to the deed as revenue or warranty stamps. In Rhode Island, where the transfer tax is $4 per thousand, a property showing $1,200 in stamps (a matter of public record) would have sold for $300,000 ($1,200/4 = 300 and 300 x $1,000 = $300,000).
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