The Real Estate Briefings

Before you sell your house, the ceiling and walls should look their best. Once you remove the furniture, there is really nothing left to sell the house by other than its foundation and its appearance.

Check all the ceilings for water stains, whether the leak is caused by plumbing or a faulty roof. Find the leak and repair it and make sure a proper job is done. Nothing irritates a buyer more than finding out – after the fact – about plumbing or roofing leaks. You don’t want people calling a lawyer.

If a water stain is left after something you have already repaired, do the cosmetic work necessary to improve the desirability of your home. That means painting. You may have to paint anyway, especially if dirt has accumulated in spots or you have an outdated color scheme. Painting makes a home look fresh and new on the inside and never fails to impress.

If you have carpet, you can leave it unless it is worn, overly smelly or very old.  Hire a good carpet cleaner, however, to get it refreshed and smelling nice. If you do choose to replace it, do so with something inexpensive in a fairly neutral color. Try to stay away from patterns or anything that might be in your taste, yet might not be in the buyers’.

Repair or replace broken floor tiles, but do not spend a lot of money on anything. Remember, you are not fixing up the place for yourself. You want to move. Your goal is simply to have few negative impressions upon those who may want to purchase your property.

If you have your real estate licence and are thinking about your next move, don’t ask yourself how you should begin, but how should you excel. The first thing you need to think about is connections.

Build and maintain relationships with your clients because returning customers and referrals is where you will get the majority of your business. Devote part of each day to keeping in touch with phone calls, handwritten notes, holiday cards and small gifts.

Here are some more tips to help:

• Try to have six months of savings so that you can concentrate on your work without the stress of bills and growing debt.
• Continue your real estate education by taking classes through online coaching camps, but be wary of the coaching camps that promise unrealistic outcomes and require immense discipline.
• Make friends with experienced agents. Take opportunities to chat with them about what brought them their current success and adapt their tips to fit your style.
• Create a personal website. 85% of people use the internet to search for houses, thus a website is necessary to attract traffic and establish credibility.
• Attempt to work with more sellers than buyers, although you will always do both. You can spend weeks showing houses to a couple just to have them use another agent or not buy anything at all. You have a greater chance of finding a buyer for a house that you have listed.
• Invest in quality business cards and hand them out whenever possible. Cards with a current photo of yourself help to create a faster connection.

I’m posting this for some friends of mine who are a really nice couple. They are renting out their condo in Ponce Inlet, FL. It is a great place to get away if you’re looking for something on the beach. The price is pretty good also. Check out their website for more info, or to make a reservation: http://www.poncenolasurf.com

Have you ever wondered what the difference is between a commercial real estate agent and a residential agent? It is not all that complicated, really. Commercial real estate agents market and lease apartment buildings, office buildings, shopping centers, hotels and industrial buildings. They typically work for large commercial property brokerages in a formal, high-pressure and very aggressive atmosphere.

Unlike residential real estate, which focuses on relationship building and emotional purchases, commercial real estate is research and analysis driven, since millions of dollars can be at stake with each client. The competition between agencies is fierce, and the competition within agencies can be even fiercer. However, if this sounds appealing to you, there is a lot of money to be made in commercial real estate.

A typical commercial real estate agent has a college degree, a sales background, extensive knowledge of finance and a real estate license (typically the same one as a residential real estate agent). There are two types of commercial real estate associates: those who represent tenants and those who represent landlords.

Tenant representatives work with companies and other corporations looking to lease or buy office space. Prospecting for clients is a big part of the job and involves a lot of phone calls and business lunches.

Once they get clients, tenant reps perform analysis and find the vacant buildings best suited for the company. They negotiate terms of the lease and prepare extensive paperwork. Like residential real estate agents, commercial real estate agents earn commissions and split them with the managing broker. The commission split depends on property type, seniority, and size of the transaction. Deals are long and complex and it can take up to a year to get paid.

Leasing agents, on the other hand, work with the owners of commercial properties to lease space to third party companies. They show and lease spaces, negotiate the terms of the leases and build relationships with current leasers in the commercial spaces. Leasing agents are always collecting information on competing properties and are required to know everything happening inside and outside of the property. A large part of the job is to entertain the brokerage community by throwing parties and other social events to market their company’s building. They generally receive a salary in addition to commission.

This field does not tend to be as lucrative as tenant representation, but the pay is more stable.

Should you buy a new home or a resale house? The choice is up to you, of course, based on what you can afford and where you want to live, but buying new offers a whole range of advantages that are not available in a resale property. Here are some of the reasons that have convinced others to buy new.

• No Surprises. With a new home, there are no surprises when you move in. You know how the house was built and what went into it; what you can see and what is hidden behind the walls. You also know exactly how to operate and maintain your home’s systems and equipment. If you have questions later, your builder will be there to give you a helpful and accurate answer.
• Have it Your Way. Why live with other people’s taste in interior decoration? Or spend the next few years redoing the previous owners’ home improvements when you can get what you want from the very start. From layout to cabinets to carpeting, new home builders offer a wide selection of standard and upgrade options. You can pick and choose what suits your own lifestyle, personality and budget.
• Newer Technology. The technology of home building has improved tremendously over the past few decades and new homes are built better than ever before. They are solidly constructed and well designed for today’s lifestyles. They are highly energy efficient, with excellent indoor air quality. From heating systems to roofing shingles and windows, today’s building products work better, last longer and often look better. The result is a brand new home that is far more comfortable and healthier, easier to maintain and more enjoyable to live in.
• Warranties. Resale homes simply do not come with a comprehensive warranty. If something goes wrong, you have do deal with it there and then, no matter what it costs. Buying a new home, on the other hand, offers peace of mind. Professional builders stand behind their work with an after-sales service program and a guaranteed third-party warranty. Your builder will explain how this warranty works so you can be sure you are getting the coverage that you want. Ask to see a copy of the warranty document, before you sign a contract.

Most home buyers take advantage of the home appraisal when they buy a new home, however, others toss the notion aside, especially when the market is hot, and that’s not a very wise decision when putting so much into something so valuable.

If you’re looking to use mortgage financing, it’s hard to overlook an appraisal. Now, many buyers, trying to compete with other purchasers, may waive the appraisal, but they will still have to have an appraisal to get financing. It just means that once the appraisal is completed, regardless of the final number, they will still walk toward the closing table.

Here’s a question: Why would you write a contract on a house for $440,000 when a professional appraiser warrants that it’s only worth $425,000? Yet such actions have become so common in some markets that Realtors even have a disclaimer form that they provide for buyers saying they have been informed of the dangers of waiving the appraisal – and yet, buyers still sign it and move along.

Waiving the appraisal is a dangerous way to buy a house. If all goes well then nothing bad happens. The buyer gets the house and thinks all this disclaimer stuff and warnings are from a bunch of nervous real estate agents who don’t like to take risks. But, what if everything doesn’t go so well? You could perhaps lose half of your money because the appraisal didn’t come in high enough for you to even get the financing.  As well, the seller demanded the deposit to pay for the lost marketing time and the money he has now has to be put out for more payments, insurance, etc., to put the house back on the market because the buyer wrote a contract he can’t fulfill.

The result is either a lawsuit (and we’re not talking small claims court); trying to renegotiate the sales price (good luck); moving forward by finding even more money to pay for the inflated price agreed upon (which is usually what happens); or taking the hit on your deposit and finding another house – except, now, with less money in your pocket than what you had before.

You’ve seen them, as we all have: Foreclosure homes that are being sold for a fraction of the cost of market price. Who doesn’t want to hit on a good deal and get their future home or future rental property for 1/3 or less the price it would cost on the traditional market? But this also means you could be up against stiff competition.

It’s not unusual for some foreclosures to receive 15 or 20 offers. Sometimes the bank will throw out all but two offers and then ask the selected buyers to resubmit what is called “Highest and Final” offer. Sometimes the bank simply accepts the best offer at inception. So, how do you make your bid seen above the rest?

• Ask your buyer’s agent to find out the bank’s purchase price on the Trustee’s Deed or Sheriff’s Deed. Generally, it is noted on the document itself, which you can get from the tax rolls or a title company. Compare that price to the price the bank is asking.
• Most agents work for one or two banks. Some listing agents are exclusive listing agents for foreclosures, and they do not list any other type of property. Since foreclosure agents deal in volume, they typically apply the same pricing principles to all their listings.
• Ask about number of offers received for that foreclosure. If there are no offers on the home, you can probably offer less than list price and get your offer accepted. However, if there are more than two offers, you will most likely need to offer above the asking price.
• Get pre-approved from your choice of lender in advance.
• Sometimes banks will pay for repairs, but typically will not agree to do so at the offer stage. If there are problems found during a home inspection, renegotiate after your offer has been accepted.
• If other buyers ask for 17 days, for example, to conduct inspections, and you ask for 10, you will be deemed the more serious buyer.
• If you offer over list price, bear in mind that the appraisal will need to substantiate that price. If you find yourself dealing with a low appraisal, you have options, so don’t despair. Remember, the bank will most likely run into this problem with the next buyer who obtains financing.

If you are in the market for a new home in Washington D.C. but are concerned about the cost of building from scratch – and the time it takes to build a house – you may want to investigate manufactured houses.

The term “manufactured house” specifically refers to a home built entirely in a protected environment under a federal code set by the US Department of Housing and Urban Development (HUD). Manufactured homes are NOT mobile homes. The term “mobile home” describes factory-built homes produced prior to the 1976 HUD Code enactment.

For several reasons, manufactured houses are an appealing alternative. Thanks to the lower prices of scale and factory manufacturing, prices are considerably lower than the material and labor prices for similarly sized conventional houses. And, of course, the time it takes to build a new home is dramatically shortened because manufactured homes are available almost “off the shelf.” As you might imagine, manufactured homes are available in an almost endless variety of sizes, styles, and floor plans.

But don’t forget the codes. The HUD code requires each manufactured home to meet the following requirements:

• Built as a one, two or three section home in a protected building center, transported to the home site on a frame and installed.
• Meets the strict HUD code restrictions for design and construction, durability and strength, fire resistance, transportability, energy efficiency and quality.
• Built on steel beams with wheels under each section.
• Meets the high standards for heating, plumbing, air conditioning and thermal and electrical systems performance.
• Passes stringent third party inspections.

A manufactured home typically offers a lower cost per square foot for the home. Financing options for manufactured homes include chattel, or home only, loans. And if you don’t like the location, manufactured homes can also be moved.

Right now, the housing market is less than perfect. This is known knowledge. However, what if you are sitting on some real estate you no longer need to own? Do you sell and take your chances in the market, possibly losing money? Or do you become a landlord and rent the property out until the market comes up and you can sell for a good price?

If you decided on renting the property out, keep in mind that it is not a perfect business venture. For every up side, there is a down side, and rental real estate is no different.

First on the list is worry about liability issues. With the increase in frivolous lawsuits, liability can be a scary thing. Providing someone with shelter in return for money puts you and the tenant in a relationship where both parties bear responsibility. You have to be certain that the property you are renting out meets all government codes.

It is impossible to prepare for every expense related to owning rental property, so there are bound to be some unexpected ones. Things such as boilers, plumbing and fixtures often need to be replaced and are not prohibitively expensive. However, faulty wiring, bad foundations, compromised roofing and the like can be very expensive to repair. If you can’t find a way to pay for repairs, you will be left without a tenant and with the grim prospect of selling the property at a significant discount. Also, as building codes evolve over time, lead paint, asbestos, cedar roofing tiles and other materials that passed inspection in the past may be reevaluated to your disadvantage.

You will also want to consider who you rent out to. Bad tenants or no tenants can cost you a lot in the long run. So, be diligent and be careful. Make sure it’s worth the cost to you before you either rent or sell.

Home buying is a big and stressful ordeal.  A bad outcome can be right around the corner, unless you are diligent and watch your step – every step – along the way.

One of the keys to ensuring that your real estate venture will have a happy ending is to make a commitment to stay involved at all times. Even though you hire professionals to assist you, they aren’t the decision makers. You are. Problems can arise if you relinquish control and let your real estate agent or mortgage person make decisions for you.

Let your agent know that you want to be kept informed of developments as they arise. The sooner you know about a problem, or potential problem, the sooner you can work on resolving it.

A common mistake home buyers and sellers make is to underestimate the time it takes to get the job done. Resist the urge to pile additional work on yourself while you’re in the midst of a home purchase or sale. By doing so, you’ll be better able to manage stress.

As tedious as it might be, it’s important to read and understand every document before you sign it. Make sure you receive copies of everything you sign. It’s a good idea to retain these documents, even after the transaction closes. If there’s a problem during or after the transaction, this documentation could prove invaluable in proving your case.

It’s also wise to keep a transaction log. This can be something as simple as a notepad on which you record important transaction-related conversations. Keep the log with your other transaction documentation in case you need to substantiate who said what later on.

Be nice, but let your real estate team know what you expect from them. This should include periodic written or verbal updates. If you’re not receiving the service you need, let this be known. Be firm, but be kind.

It’s not new news that the housing market is in a crash. Though house prices continue to fall in many locations, prices are still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer’s annual income with 20% down payment. Landlords say a safe price is a maximum of 15 times the house’s annual rent.

Yet on both coasts, those safety rules are still being violated. Buyers are still borrowing 6 times their income and putting only 3% down, and sellers are still asking 30 times annual rent, even after recent price declines.

Renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents prove that prices will keep falling for a long time. Anyone who bought a “bargain” this time last year is already sitting on a very painful loss.

On the coasts, annual rents are 3% of purchase price while mortgage rates are 6%, so it costs twice as much to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 9% of purchase price, which is three times the cost of renting and wipes out any income tax benefit.

Buying a house is still a very bad deal in the richer neighborhoods, but it does make sense to buy in some relatively poor neighborhoods where prices have already fallen into line with salaries and rents. Check whether you should rent or buy in your own area with this NY Times calculator.

You are searching for the perfect commercial property for your business. Perhaps this is the first time or you are looking to relocate your current brick and mortar store. Once you find that property, you need to sit down with the landlord and discuss a few things.

The first item of business usually is the cost of the lease itself. Lease costs are determined in two steps:

1. The monthly cost is determined by multiplying the square footage by the cost per square foot, which gives you the annual cost, then dividing by 12 for the monthly cost.
2. The “Common Area Maintenance” (or CAM). The common areas are spaces that are “outside” the general office space, such a hallways, driveways, some restrooms, a breezeway if the building has one, etc. These areas need to be maintained, but if you are only leasing a portion of a bigger building, you shouldn’t have to pay the full cost. In some cases, the cost is shared, in others, the building owner takes care of it, and yet in others you pay the building owner back for these costs.
3. You want to discuss what is included in the lease. This includes the above costs, but the lease should also include such costs as the following:
• Property taxes (pro-rated on the percentage of the building included in the leased space).
• Snow removal, lawn mowing and landscaping.
• Driveway, sidewalk, parking lot repairs and maintenance.
• Utilities (electricity, gas, sewer, water).
• Collecting garbage.
• Insurance on the property (pro-rated among the tenants).
• Structural and non-structural repairs and maintenance.
• Mechanical system repairs, maintenance and replacements.

The landlord will tell you how many of these items are included in the lease payment, and how many you will need to pay yourself.

So often landlords and tenants find themselves looking for guidance because an unpleasant surprise has cropped up during the course of a lease.  In most every case, such surprises are the result of having signed a poorly understood or poorly constructed lease agreement.

For example, less sophisticated tenants might not know the technical lingo of the landlord’s “Standard Form Lease.”  They trust that it states the basics they need to know. Thus, they will sign the lease without always knowing what it is they are signing.  By the same token, inexperienced Landlords will often embrace the use of a lease agreement without really understanding the terms and conditions the agreement will impose on them.

A lease is much like a partnership agreement in that it lays down the parameters of a business relationship.  When everything goes well, the signed lease will help both parties involved rather than become a problem. But the true test occurs when there are hiccups in the lease understanding.  If the lease has not been carefully drafted, a hiccup can become a major problem for one or the other of the parties. 

Tenants often lose sight of the fact that the “Standard Form Lease” represents the landlord’s wish list.  Keep this in mind when signing a lease agreement. It is a bit like insurance: The insurance company bets everything will go in their favor and they will never have to pay out. A lease can be similar. The standard lease is the landlord’s way of betting you will sign and all will go in his direction. But, if you know what you are looking at, changing a lease agreement to shift the odds a bit more in your favor, is almost always a necessity. In such a case, the landlord should know what these changes are and how they can affect him.

Buying a home is a huge purchase, probably one of the biggest purchases most people ever make.  Naturally, people want to protect the value of their property. Homeowners insurance is a contract between a homeowner and an insurance company. As long as the owner pays the required premiums and meets the other policy requirements, the insurance company guarantees to reimburse the owner for any losses incurred due to natural disasters or human-caused damage.

Your basic homeowner’s insurance policy covers certain natural disasters such as fire, lightning, wind or hail storms. However, earthquakes and floods are not covered because these disasters are usually specific to certain regions of the country and can cause extreme damage. These policies can, however, be purchased as separate policies. If you live in a flood zone or near an earthquake fault line you may be required by your mortgage company to carry these protections.

Basic policies also cover theft loss and vandalism. It will also provide for something that many people may not normally associate with home protection – liability coverage for lawsuits brought against the owner by people who were injured on the property. This includes the cost of legal defense up to the allowed policy limit. Additionally, most policies will have a provision that will cover the basic medical expenses for the parties.

So, do you need homeowner’s insurance? Just as with your car, most all mortgage companies are going to require that you have adequate homeowners coverage. This is because the investment is almost as big for them as it is for you. They want to make sure the property is protected from major damages so that if you are ever unable to keep up with your payments, the lender can then reclaim ownership and be able to sell it fairly easily. And even if you own your home outright, a good insurance policy is still the best way to protect the value of your home in the face of the unexpected.

Fraud is everywhere and in the real estate business it abounds. Even home appraisers have been known to dip their hands into the fraud bucket. The government is seeking out fraud companies in their own way, but they also encourage the public to take their own measures against these crooks. If you are looking to get your home appraised, the following tips can help you prevent fraud.

• Make sure the appraiser has a valid license. Independent practitioners may lure you with their lower charges but make sure that they are registered with the state and have no violations in the past.
• Be cautious of mortgage banks. Mortgage banks don’t always have a better system of determining your house’s worth just because they’ve established a name in the industry.
• Fannie Mae and Freddie Mac have recently adopted a rule requiring appraisers to specify the components of their findings in more detail. Compare their findings. That should keep you from having doubts whether you’re being duped or not.
• Don’t be afraid to ask lots of questions. When in doubt about your assessment, ask your appraiser to clarify things for you. It would also help to explain to the professional all the remodeling work that you’ve undertaken.
• Follow the guidelines set by the government regarding home appraisals. With the aid of an appraisal management company, you will be provided with a middleman who will send an appraiser to assess your home’s value. That should eliminate the influence of the lender on the appraiser.

There’s little that beats good old common sense. So, if your appraiser seems to be less than trustworthy, follow your instincts.

It can be a renter’s dream (personal attention, prompt repairs), or a nightmare (too much and too personal attention). Here’s what to know before moving into that basement apartment.

It can be very convenient to rent an apartment where your landlord lives in the same building, it can also come with its fair share of inconveniences. What happens when the landlord takes your parking spot, for example? Here’s a look at the good and the bad of paying rent to the guy upstairs (or next door).

One definite perk of renting a mother-in-law or basement apartment in a landlord-occupied building is the rent factor. You can often get a better rent deal. In many cases, with current homeowners being faced with income loss, foreclosure or short-sale-potential properties, they are instead opting to share their space, often sacrificing their main living area for the tenant, to avoid being completely displaced from their homes.

A landlord living that close to you tends to be more observant of your needs. Sometimes, maintenance issues can be fixed within hours. A landlord doesn’t want someone who’s upset living that close.

The downside is that, if you and the landlord are friends or related and a major problem occurs, can you keep the relationship cordial while working through the problem? If your upstairs apartment neighbor doesn’t do his share of the upkeep on the premises or blares the stereo at all hours of the night, you would typically complain to the landlord. He acts as the intermediary between disputing tenants. When that upstairs neighbor is the landlord, it’s a bit more complicated.

And while maintenance and repair issues are usually made easier when the landlord is right there, there can be an added level of animosity if things aren’t always resolved in a timely manner.

Landlords that lives nearby can also become “too close,” meaning they stop by whenever they wish and the law says they can.

So, before taking an apartment or situation where the landlord lives in the same building, think about your situation and weigh the pros and cons before making a definitive decision.

When investing in anything, including real estate, having a budget planned out is a great idea. By having an investing budget you will be able to stay on track and ensure that you do not get yourself into any hot water. Time and time again real estate investors make bad mistakes when it comes to their budget. Sometimes they can recover and other times they may end up losing money. But one thing is for sure: By creating a detailed investing budget you will give yourself the best possible chance of staying out of financial trouble. And this is definitely something that you want to do.

When setting your investing budget be sure to consider every option. If you forget even one detail you may end up messing up your entire budget. So, in order to make sure that your investing budget is as accurate as possible you will need to write it down. This will give you what you need in order to analyze your situation and then determine what your investing budget is.

One thing to remember about your investing budget is that it can change as time goes by. After you have one property making you a steady income you may want to invest in another and if this is the case you will have more money to do so thanks to your first investment being a success.

For this reason, it is important that you rethink your investing budget on a regular basis. Of course, you only have to do this if your situation has changed in any way.

Do not make the mistake of getting involved with real estate investing if you do not have a concrete budget in place. There is no good that can come from this. Remember, detailing an investing budget is not difficult. Sure, you will have to put in a few hours or so, but in the long run it will be well worth your time.

Overall, an investing budget is one detail that is important if you are going to get involved with real estate. If you can master your own budget, you will be able to more easily make money in the real estate industry.

What to do before buying a new home is a common topic and very important, but what many people don’t think of is what not to do before buying a home.

Make no major purchases. Avoid buying a car, or major appliances or purchases of any kind that will add debt. This can also include furniture, appliances, electronic equipment, jewelry, vacations, expensive weddings, etc.

Leave your money where it is. When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs.

Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts. 

If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them.  The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits.

You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.  Don’t become exasperated at your lender. They are only doing their job.

To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it “easier,” could make it more difficult for the lender to properly document.  So leave your money where it is until you talk to a loan officer.

When you buy your first home and you see that 30 year term, it seems like you’ll be paying for your home forever. However, there are ways to shorten your mortgage term without refinancing or paying extra penalties.

• Pay a little extra money every month towards your principal. You can usually add a dollar amount that specifically goes towards that and even if you can only afford $20.00, send it in. That is an extra $240.00 towards your principal each year.
• Make one extra full payment a year. By doing this simple thing, you can reduce your loan term by years.
• Don’t spend money on too many frivolities. If you have extra cash on hand, invest it in your equity or in home improvements – especially the kitchen and bathrooms which will increase your home’s value.

No matter which mortgage you choose, make sure you ask about prepayment. If you want to refinance down the road, you don’t want the obstacle of a prepayment penalty to get in your way. Prepayment penalties are not the norm – they are usually associated with higher risk loans with higher interest rates. Basically, if you decide to pay off the loan, they will demand an amount of money as a penalty. This can be a fixed amount or a percentage of your loan. No matter which program your mortgage broker or mortgage website is suggesting, ask about prepayment penalties before you sign. This can mean thousands of dollars in savings down the line.

Fairfax County, VA. In 2008,  the residential real estate market experienced a decline due in part to the over supply of homes for sale. This led to lower sale prices in many neighborhoods. In 2009, the market continued a decline but at a much slower rate. As of January 1, 2010, the real estate market changed during 2009 has resulted in an overall decrease in residential property assessments due to equalization totaling -5.56%.

The amount of price decline varied by property type and neighborhood.  About 80% of residential properties, excluding those with new construction, have an assessment decrease for 2010.  Another 16% have no change in assessed value from the prior year. 

The number of days that properties were listed for sale decreased from an average of about 100 in 2008, to an average of approximately 72 days in 2009.

Residential foreclosure properties decreased in the County during the past year by roughly 60%. As a duress sale, foreclosures themselves, or lender “take backs”, are not “arms-length” transactions under Virginia law. 

These forced transactions are typically based on the loan amount, not necessarily the fair market value.  Regardless, foreclosures generally have a dampening affect on competitive sale prices, and some influence continues to be reflected in the 2010 assessment decline.  The prevalence of foreclosure activity was not uniform throughout the County. 

It is important to note that the assessment changes discussed here are county-wide averages and may not reflect the assessment changes within a different neighborhood.

Getting a mortgage can make a new home buyer, or even a seasoned home buyer, quake. What are all those terms? What do I need to know? You want to make an informed decision and a mortgage broker can help you do that.

Mortgage Brokers. Finding the right home may seem like the hard part of a real estate transaction, but in reality, getting the best financing can be much harder. This is partially because there are so many options nowadays for mortgage loans and so many places to find them.

A mortgage broker or your local bank can often lay out your options clearly. They will be armed with what you want in terms of loan term, ideal rate, targeted monthly payments and the like. If you’re smart, talk to them before you decide on your home so you really know your price range.

Once you have your options, go online and shop around. Some mortgage websites have so many lender partnerships that they are bound to find you a cheaper rate, shorter term or more competitive option – they just have greater resources! Don’t feel bad either – this is your financial future and if your local folks can’t offer the best mortgage options, that’s life.

The term of your mortgage is an important factor to consider as well. Obviously, the longer the term, the lower the payments, but low payments aren’t on every person’s mind. In fact, some people prefer to make larger payments towards their home loan because it will be paid off more quickly and because they are putting their money into an appreciating asset.

Additionally, if you plan to rent or lease your property or a unit in your property, you’ll make more money the faster you pay down your mortgage. The moral of the story is that larger payments are better as long as you can afford them. This doesn’t mean you can’t get a 30 year fixed mortgage and just be disciplined enough to make an extra payment or two throughout the year, but it does mean that the more money you put into your home, the better off you’ll be.

There are a lot of methods to utilize on the search for a perfect home. Below are the most popular ways, as well as some not so popular methods of house searching and reasons for their success or failure.

1. Yard Signs. Many people see a house as they drive by and see the For Sale sign on the front yard. This can be great if you just happen to spot that house while running errands (and is not feasible if you need to relocate to a new state), but relying only on spotting yard signs is time consuming and impractical. Also, not all homes for sale have the sign out right away. There are many more successful methods of home searching.
2. Open House Tours. Again, not practical for long distance moves, but a fun thing to do if you know the location you are looking for or have a specific house in mind and don’t yet want to commit to a real estate agent. You just want to look.  The problem here, on the side of the real estate agency, is that the agent will see every person who walks through the door as a potential way for them to make a commission.
3. Surfing the net. This is by far the most popular method of home searching in the 21st century. Many, if not most prospective home buyers use the Internet to research homes for sale before contacting an agent. Once you have selected homes from listing databases that you would like to see, then contact your agent.

Basic rental is an old practice. You buy a piece of property and rent it out to someone else, whether it is a house, a condo, a townhouse, etc.  You, as the owner of the property, pay the mortgage, taxes and cost of maintaining the property.

To invest, this means you need to make a profit. You can charge rent that just covers all the costs involved, and later when the property appreciates, sell it for a profit. This way, you pay little to nothing to keep the property until it appreciates to a good value. (According to the U.S. Census Bureau, real estate has consistently increased in value since 1940).

You may also charge more than the costs in order to produce a monthly profit. But the most common investment strategy is to only charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit.

There are, of course, blemishes on the face of what seems like an ideal investment. You can end up with a bad tenant who damages the property or, worse still, end up having no tenant at all. This leaves you with a negative monthly cash flow, meaning that you might have to scramble to cover your mortgage payments. There is also the matter of finding the right property – you will want to pick an area where vacancy rates are low (due to demand) and choose a place that people will want to rent.

Perhaps the biggest difference between a rental property and other investments is the amount of time and work you have to devote to maintaining your investment. When you buy a stock it simply sits in your brokerage account and (hopefully) increases in value. If you invest in a rental property there are many responsibilities that come along with being a landlord. When the furnace stops working in the middle of the night, it’s you who gets the phone call. If you don’t mind handyman work, this may not bother you; otherwise, a professional property manager would be glad to take the problem off your hands – for a price, of course.

There are times when buyers will push sellers, making demands that could be bad news for sellers in the long term. One practice that is creeping in is the handing over of keys before the sale has been settled. One of the causes behind this situation is the market itself – buyers are selling and waiting until settlement on their properties before entering the market to buy. This is leaving them homeless until they settle on their new home. Of course, if the home is empty, why not move in now?

There are several dangers to this practice. The first is obvious. What happens if the sale falls through? The buyer is not a tenant so you can’t evict under tenancy laws, and if the seller has taken some or all of the deposit then the buyer has equity in the home. It becomes a pretty messy situation. The second problem is more frequent. Once the buyer has moved in, there is no sense of urgency to complete the settlement. This can then take months rather than weeks.

If a buyer requests the keys early ‘so they can start to move in’, think twice and make sure you think long and hard. If there is a situation where need is a problem, and that the sale could fall through if you can’t come to some arrangement, allow them to move in as a short term tenant. This will require a lease and all the normal tenancy processes such as deposit and rent. How you negotiate this is up to you, however, don’t be too cheap in the process. If you use market value as a guide then you will receive a fair return.

Of course, a tenancy agreement is not always as easy as it sounds. You may need to check with local state and county requirements – these can sometimes be quite tough with certain requirements and fees needed. Your real estate agent should be in a position to help you in this regard, particularly if they can act as owners agent. They will charge a fee, of course, but since you are not really renting for income, that shouldn’t be of concern.

If the buyer agrees to rent then there are no problems. A tenant can be evicted if problems arise. If the buyer doesn’t agree then don’t be in a rush to hand over the keys – you could be making life harder on yourself.

Home buying today is very different to what it was five years ago. When the market was at its peak the moment a home came on the market there were people falling over themselves to get a view and perhaps submit an offer. Today, a home comes onto the market and while there may be many potential buyers checking it out on the MLS, there are few who are actually attending open days. If you’re a buyer, your house hunting should be like that of a cat stalking its prey.

The first virtue of a stalking cat is patience. As a buyer, you need to have the patience to wait, check out all the available properties that meet your criteria and, like the cat, make tentative advances. Once you do find homes that meet your criteria, and that you find attractive, you have to pounce and pounce quickly. Like a cat, if you miss your prey, you shrug your shoulders and move onto the next one.

For most buyers, that is the real key – moving on. We recommend finding three or four homes that you find attractive enough to make offers on. When you’re ready, start with the first home on your list and make that offer. If it is refused and the counter offer not acceptable, rather than countering back, move onto the next home, then the next, then the next until you have made offers, one at a time, on each property.

Why take this approach? Your aim has to be to secure a suitable home at a good price. There will be more than one home that falls into the  ‘suitable’ category so don’t stop at the first. If you make an offer and it’s rejected, by moving on to the next property you are signaling that you mean business and that you’re not going to play the barter game. Having gone through your list without success, you can then go back to the top of the list and make your counter offers but letting it be known you are interested in other properties.

Using this process, you will quickly find a seller ready to meet your terms. Like a cat, you have stalked the prey and pounced – and won.

Real estate agents probably have one huge beef when it comes to home owners putting their properties on the market – their unrealistic expectations when it comes to selling prices. If the home owner can’t at least value their home for what they paid for it, it is the real estate agent’s, or the appraiser’s fault. The cold hard truth is simple – your home is worth whatever the market is willing to pay for it – and that could be nothing.

That last statement will have many in shock, but the truth is some homes will not sell in the current environment. With so much housing stock available, buyers can really pick the eyes out of the market. If your price is unrealistic, your home is not in a sought after area and the home is not well maintained then you’ll be lucky to give it away, especially if the local taxes are also high.

Many home owners are just plain unlucky. They purchased their home when the market was at its peak. Like everyone else, they expected prices to continue to rise. They may have also purchased the property using give away finance. You know the type – little income, little assets, little savings, but what the heck, we’ll give you a mortgage anyway.

Those days are gone and many of those buyers, as well, have been foreclosed upon. If you are looking to recoup your investment then you’ll have to suffer through the waiting game. Home prices will improve, there’s no doubt about that. The fall was huge and it may take ten years for property prices to recover – then again, it could take five. That’s how volatile the market can be at times.

If you are looking to sell your home, don’t expect any fancy prices. If you bought at the peak of the market then expect a substantial loss. If you are coping with your mortgage then perhaps the best option is to stay put and to whether the storm. The cold hard truth is, it’s a flooded buyers market and your chances of recouping your purchase price, if you bought in the last 5-10 years, could be nil.

If you’re in the market to buy a home, consider casting your net just a little bit wider. Research is becoming a real key to home buying and some of that research should include settlement and ongoing costs. There can be a huge variation between states when it comes to transfer and annual taxes – there can also be a large variation between counties in the same state.

There are situations where, by adding a mile or two to your search area, can result in savings that run into thousands of dollars. In fact, you can often measure the difference in tens of thousands of dollars. Taxes aside, home prices between counties can vary. A three bedroom home in one county may cost you $200,000-$250,000 while the exact same home in the next county, $10,000-$20,000 less. The difference, an extra 15 minutes travel time to work perhaps.

If you do the math, a savings of $20,000 when buying a home, particularly if you are like most buyers and relying on a mortgage, will save you thousands just in interest payments. Add to that a possible smaller transfer cost and annual taxes that, all things being equal, are going to be charged on a lower valuation. In many cases, the annual rate is also smaller, further adding to the savings.

Home buying when money is tight is becoming a real skill. Adding a mile or two and moving into the next county could save you tens of thousands of dollars – yet that one or two miles is meaningless when it comes to travel times. If you are in the market for a new home, considering looking just a little further afield – you may find better value.

Of course, I have to add one rider to this – you can add an extra mile and find yourself in a county with higher home prices and higher annual taxes – but then, I did say you have to do some research.

Obtaining a mortgage today can seem like an impossibility for many home buyers. Lenders have gone from virtually throwing money at anyone who walked in their door to holding back loans even to those well qualified. There are a couple of things that you can do to ensure a smoother mortgage journey.

Lenders today are really trying to protect their own backs.  If they provide a mortgage and the borrower eventually defaults, they are often left with a loss and, as we have seen recently, face bankruptcy themselves. As a borrower, you need to safeguard their money – so it goes beyond just having a good credit record. These points will certainly help you:

• Build a perfect or near perfect credit history and credit score.
• Maintain that credit score. This is often the downfall of many would be borrowers. If you maintain a good credit score, if you ever need to refinance, or renegotiate your mortgage, a good credit score can be a big help.
• Have patience. If you do gain mortgage approval, don’t celebrate by going out and refurnishing your new home on credit. Lenders are now rechecking credit scores just prior to closing the sale. If you have been borrowing big, it could flag you as a potential lending risk. Maintain your credit score.
• Buy with as big a deposit as possible. The higher your deposit, the more equity you will have. The more equity you have, the higher the protection when it comes to property price fluctuations.
• Buy well below your means. This is important today. Determine how much you can realistically afford then borrow to 85-90% of that value. You can then pump the excess into your mortgage thereby building a buffer should any unforeseen problems arise. Lenders look more kindly on borrowers who borrow well within their means.
• Engage a good buying agent. Buying agents can often put you in contact with lenders that feel a little freer with their money, especially local lenders.

These will not guarantee you a mortgage. However, with a high deposit, realistic repayments that you can not only afford but add extra payments to should make you a more attractive borrower.

If you’re looking to buy a home in Maryland and you don’t know the state, you will need to do some research first to ensure you select the right area for your research.  For many new residents, their move is motivated by employment so the general area will be known, but sometimes you need to be more specific.

Say, for example, you were moving to Gaithersburg – can you be more precise? There is a lot of information you need before making such a decision. If you can visit the area, so much the better, but then, you can only see so much and you cannot expect to drive over every square inch. This is where modern technology, namely, the internet, can be so useful.

One extremely useful resource is that provided by the Maryland State Government, particularly the Maryland Department of Planning. Their website, the Maryland State Data Center has a wealth of information that can make planning a visit, a purchase, and a move a lot easier. Some of the information that is available includes:

• Public School locations,
• Population estimates around the state,
• Growth areas, and
• Zip code maps

You can also see data on median household incomes, housing price indexes, along with census data on population, housing, employment, labor force, and income projections. You can also hone in on individual counties. It may be very statistical in nature, but the information can be useful in helping to determine which areas are likely to be of better value when buying a home.

The best places to buy are those that are experiencing growth, have at least the average, or above average incomes, or have all the necessary services close by.  Homes in these areas are traditionally the first to see a rise in demand when the market turns.

There are state government, and in many cases county, websites that offer a lot of information for those researching prior to a move. If you are considering a move to Maryland, check out what the Maryland State government’s web site has to offer – it will make home buying in Maryland just that little bit easier.

Interest rates on 15 and 30 year mortgages are at record lows this week yet buyers seem to be leaving the market in droves. One reason for this is the increase in those looking to refinance rather than buy. It’s a catch 22 since fewer buyers lead to fewer sales, and a dropping in real estate prices. As real estate prices drop, those with mortgages become reluctant to sell and buy up.

There are a number of options. For those with extremely good credit ratings and decent deposits, buying into a larger property, a property that will meet their needs for the next 10-20 years, could be a smart move. Prices are low, interest rates are low and, over time, the home will start to appreciate in value. The question always remains, what to do with the current property?

Selling may well see your home priced at tens of thousands of dollars below what you paid for it.  It can be a balancing act. Lose money on one but, over time, recoup that and more on a larger property. It’s risky, and if takes six months to sell, you could be caught with two mortgages to pay.

A second alternative is to place one of the properties onto the rental market. When demand for housing drops, there is always a counter demand in rental properties. We are seeing this now with rental values in Maryland making it much more economical to buy than rent – yet many are wanting to rent and are finding suitable rental properties hard to find.

If your credit is good, and you have a decent deposit, entering the market as a potential landlord could see you building a decent nest egg for the future. If you look back in history, many of our richest families started out by buying properties when the markets were low. It’s food for thought.