Disclosure of Real Estate Sales Prices is Not Needed

Disclosure of Real Estate Sales Prices is Not Needed

op-ed submitted by Debbie White

At the last CBJ Assembly meeting on October 26, Ordinance 2020-47 [Regarding Disclosure of Real Estate Values in Transactions] passed 6-3. There had been little discussion on this ordinance and very little input from people that understood the issue. Fortunately, a notice of consideration was filed, and if six assembly members agree, the ordinance will come back for discussion again, and more community input will be allowed. Otherwise, without knowing how the information will be provided, the CBJ will require the disclosure of real estate sales prices.

I’ve been selling real estate in Juneau and northern Southeast Alaska for 21 years. I’ve seen homes sell and appraise both above and below the tax assessor’s estimate of value and in many cases off by 25% or more. I also served several years on the Board of Equalization and understand that while assessments should be close to the actual value, there are many reasons there is a discrepancy. It’s not because the assessor is missing information, but more that they are using mass appraisal methodology rather than USPAP methodology. There is no way, without paying for a full fee appraisal on every property, every year, that the assessments will be equal to the appraisals.

However, the assessors have more information available to them today than any previous occupants of that office. For once, they can see the inside of homes. Photos are all over the internet, and anyone can look up the price history, days on market, see the upgrades – inside and out. If a house is on the market for only a few days, you can ascertain that the purchase price was close to the asking price. Instead of only a written description in a pay-by-the-word advertisement, detailed descriptions of the homes give clues as to the condition of structural components and upgraded appliances, furnishings, and fixtures.

There are many variables that go into the sales price of a home. In addition to the condition and age of the home, and the special features of the land, the closing cost allocation, needed repairs and upgrades, the interest rates available for different loan types are a component in the prices of homes. Right now, many interest rates are below 3%. Only 15 years ago, people were thrilled to get a 6% mortgage. I remember having a mortgage at 8.5% in 1996. My parents and other elders were happy to get a 12% mortgage. In 1981, interest rates were over 18%.

In case you aren’t math inclined, per $100,000 of mortgage, payments (not counting insurance and taxes) would be $395.00 at 2.5%, $421.60 at 3%, $599.55 at 6%, 733.76 at 8%, $1028.61 at 12% - and $1507.09 at 18%! Buyers generally are focused more on their monthly payment amount than the overall purchase price.

We have a process that has worked well for decades, and this is not the time to make sweeping changes. People today are scared. They are isolated. They are suffering financially. They are trying to be teachers and keep their jobs if they still have them. There is enough certainty to warrant leaving this alone. The Assembly has other priorities.

Moreover, during the last Assembly meeting, a member stated that the HUD1 closing statement and appraisals were readily available at the Recorder’s Office. This is not the case. It appears the only reason this assembly is pushing this ordinance through is simply that they have the votes. What they are missing, nearly willfully, is a thorough understanding of the ramifications this unnecessary invasion of privacy could cause in the future.