via Philadelphia Business Journal

It is from a conference held by the Philadelphia chapter of the Urban Land Institute last week at the Villanova Conference Center. The topic was “Betting on real estate in the city or the suburbs…or hedging your bet?”

There are good quotes in there from local developers and other attendees – some about the convoluted process in Philly, others about the recent real estate market in general. One panelist compares the recession-damaged industry to post-WWII Germany.

It’s worth a read: Prominent Philadelphia developers, in their own words

The post Via PBJ: Prominent Philadelphia developers, in their own words appeared first on Real Estate Law Blog.

Class B office space is often competitive with Class A space, in terms of appearance, amenities, and location.

When looking for an office space to fit your needs, you will notice that the office spaces are categorized into three classes: A, B, and C. The class that each particular unit is placed into depends on a number of things including the desirability of the location as well as the quality of the particular office.

Variables such as cost, tenants, age, location, and other specific features of the building play a part in understanding the class to which each office space will be categorized. It is important to understand the differences between these three classes because it will help you to decide which office space is best for your business.

In the simplest terms, Class A space is of the highest quality, with the best location compared to the others. However, with such great features, the rate to rent this office space is understandably higher than average. Following A is Class B which is available at an average rental rate and still offers an average quality space in a decent location. Class C is considered to have the least appealing office space when it comes to location and quality, but, as expected, it can be had for a much lower rate.

Although it isn’t the best-looking office space, Class C space is the most affordable.

Although Class A space might sound like the ideal location for businesses that can afford it, this type of office space makes up only ten percent of the total market. The design of these buildings is modern, unique, and appealing to the eye. These buildings are generally newer and come stocked with the latest systems and technology.

Class B offices serve a large variety of businesses; this class serves most of the market. Although they are not usually brand new structures, they are oftentimes renovated. Finally, Class C spaces are usually in older buildings that have not been recently updated and are often not as well maintained. At the same time, these buildings are often perfect for the basic needs of operating a business, without the bells and whistles required by some.

Important to note, however, is that there is not an objective set of criteria to classify office space; whether a space is considered “Class A” or “Class B”, for example, may vary depending on who is making that assessment. At the same time, these classifications can help a business find the right kind of space for their needs.

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In Philadelphia, there has been a great deal of worry over how the city’s Actual Value Initiative (commonly referred to as AVI) will affect homeowners, the local real estate market, the school district, the City of Philadelphia’s financial health, as well as the overall health of the city’s economy.

Nevertheless, some people, especially those living outside of the city, are asking more basic questions like: “How do Philadelphia’s real estate taxes work?”, “What is AVI and how does it work?”, and “How will real estate taxes in Philadelphia compare to surrounding areas?”.

In a series of posts, I will be looking at Philadelphia’s Actual Value Initiative, the problems it seeks to address, and its likely effects on residents.

The Current Property Tax System (Before AVI)

As of 2012, Philadelphia has a real estate tax rate of 9.432%, which is comprised of a 4.123% tax going to the city and 5.309% going to the school district.

This rate is applied to the assessed value of a property to calculate how much is owed in taxes. The assessed value is simply 32% of market value, an amount calculated by the Office of Property Assessment (OPA).

Therefore, the tax bill for a property is 9.432% of 32% of its market value. It is important to note, however, that the OPA’s “market value” is not the same thing as the price for which the home was purchased. According to the OPA, three approaches are used in their assessment, but the sales comparison approach is most frequently used for residential properties.

“This method compares recently sold, reasonably similar properties within a short distance of a specific property or block. Adjustments to value are then made for known differences, resulting in a fair market value.” – OPA Website

While it is true that the market value of a home can be affected by the prices of recently sold properties nearby, it is not usually by a whole lot. A significant disparity often exists between a Philadelphia home’s “fair market value” as determined by the OPA and the price it would actually bring on the real estate market. Herein lay the main problems with how property taxes are handled in the city.

Related: Infographic – How Real Estate Taxes Work in Philadelphia

Up Next: Common Issues with the Current System

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The post How Real Estate Taxes Work in Philadelphia (Pre-AVI) appeared first on Real Estate Law Blog.

Home foreclosures are becoming more and more common. With the decline of the economy it is becoming increasingly difficult for many people to make their monthly payments. Such homes are often marked for sale when the owner fails to meet the last minute agreement for tax or mortgage. These homes are sold under auction; ads related to its marketing can be seen in newspapers.

Those in the position to purchase a home can take advantage of this situation and often times buy the home below market value. There are several tips to keep in mind while purchasing foreclosed homes. You must inspect such homes thoroughly before any writing is made on paper. For the process of inspection you can request the help of an experienced electrician and plumber. Keep in mind that such homes are comparatively cheaply sold because the government wants to get rid of these home fast.

Despite all the advantages of purchasing foreclosed on homes, there are some risk factors that you should be aware of before finalizing the deal. Often times real estate attorneys are even brought in to help with the paperwork. As these homes are likely to be abandoned by the owners for a long time they might not be in the best condition. Many of these homes need a lot of work inside and you may be looking at a year of renovation.

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Foreclosures

The people who are specialists in buying foreclosures prefer to buy these assets before the proceedings get real. Foreclosure proceedings vary. In mortgage situations, the seller can stay in their homes for a year before moving out. The seller has every right to withdraw the sale at any time, in the event he or she has managed to gather the required funds to prevent the sale. Buy homes that have been foreclosed on is taking advantage of the seller’s misfortune.

The post Settling for Real Estate Foreclosures appeared first on Real Estate Law Blog.

Many problems could exist at properties that are not visible externally. In the same way you need to hire a real estate inspector for the property, you should hire a real estate lawyer to inspect the contract. A real estate lawyer will go through the documentation carefully, protecting your interests.

The best way to control your risk when completing a real estate transaction is to hire a real estate contract lawyer. These lawyers will be able to verify everything related to the property in a professional manner. This is true when you buy a property or want to rent a property you own. To avoid problems in the future, it can be a good idea to hire a lawyer when preparing the house purchase contract or lease agreement.

Dealing with a real estate agent is not enough; they are not qualified to provide legal advising as a licensed attorney. Attorneys experienced in transactional real estate can be of great help to you in making sure a deal is perfect and error free.

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Although these are not the ideal conditions for selling a home, it prevents foreclosure and even bankruptcy for some homeowners. In today’s economy, short sales have become very popular, as many homeowners are “upside down” or “underwater” on their mortgages.

A Short Sale is Often the Best Way to Avoid Foreclosure

The rationale behind short sales of property from the perspective of both the homeowner and the lender is to avoid foreclosure, which can be a lengthy and costly process. Even after the foreclosure, the bank is stuck with a house that it must now sell to recoup some portion of the capital they originally lent.

With a short sale, there is a buyer present and willing to purchase the house, albeit at a discount. From the homeowner’s point of view, a short sale might be the least costly way to resolve their current situation. Lastly, from the buyer’s point of view, a short sale purchase can mean a great deal for a residence or investment property.

Whether you are considering a short sale from the buyer’s or seller’s perspective, it can be helpful to consult with a short sale attorney who understands the process and can protect your best interests.

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Along with transactional concerns, environmental compliance is often an unforeseen detail. Regardless of our experience in real estate, it can be important to hire a good environmental permitting and compliance lawyer who is experienced in this area. This is especially true if you have development plans for the property, which could very likely mean a number of permitting requirements.

There are many real estate lawyers available today that specialize in environmental compliance matters. These lawyers are commonly hired by large construction companies, who often get involved in legal disputes with a local municipality or other government agency during a project. Hiring an environmental permitting and compliance lawyer now may prevent unexpected problems in the future. If you already have compliance issues, hiring an expert can help resolve the issue properly and in a timely manner.

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Many in this situation work harder when growth of a business is stagnant or on a diminishing trend, however sometimes their efforts go in vain. Debt may increase on a daily basis and they begin to worry what will happen to their business, themselves, and those who depend on them.

Sometimes you may reach a situation where the amount that you owe goes spiraling out of control. In these sorts of cases, you may want to approach a bankruptcy attorney for help. These lawyers will help you weight your options and make the right choice.

Bankruptcy is not the only option, however. When you are not capable of paying off the money you owe, there are a number of other avenues you can use to improve your financial situation. This is why it can be a good idea to hire a bankruptcy lawyer who can give you a better idea of what is most appropriate for your situation.

Bankruptcy attorneys speak on your behalf to your debtors, trying to come up with a solution all parties can agree with. Sometimes debts can be released, consolidated or modified payment plans are set up, and lower interest rates can even be negotiated. Rather than manage this stressful process on your own, hire a competent attorney who knows bankruptcy law.

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