Maryland and Virginia Real Estate and Homes Blog

FOR REAL ESTATE INFORMATION, ASK A REAL ESTATE AGENT OR BROKER.

FOR MORTGAGE LOAN INFORMATION, WE ASK LOAN OFFICERS. 

Answering questions about mortgage loans is best done by loan officers, the experts. 

We answer questions about real estate in my market area, Maryland and Northern Virginia.   That’s our business as a real estate broker. 

For questions about mortgage loans, we ask the experts, loan officers. 

Below is the most recent Q&A in our continuing series:  ”Ask the Lender” page of Homefinders.com. 

QUESTION: I’ve been advised that an FHA loan is a good option for us now. We have reasonable credit but not very high credit scores. Also, can we get closing help with an FHA loan?

ANSWER: FHA is just hard to beat right now.

Using the services of an experienced Realtor is key to this savings the client has for years after the purchase is over.

For more information, visit the Lender Q&A page on Homefinders.com

KNOW YOUR PRICE RANGE BEFORE YOU TOUR HOMES FOR SALE

Before touring homes for sale, it’s a good idea to know your price range.  The Internet offers wonderful information for home buyers showing ACTIVE LISTINGS of homes for sale, photos, features, and more.  However, we have found that many prospective home buyers do not know what their qualifying home price would be.  The agents with Homefinders.com will help you determine a safe price range.  Prior to making an offer on a home you wish to buy, you will need to have a credit review done by a qualified loan officer.  The loan offers on the “Ask the Lender” page of Homefinders.com can help.  Give them a call. 

JUST GETTING STARTED?  First time home buyers and home buyers in moderate price ranges may need help with down payment and/or closing costs.  We can help you find homes that qualify for DOWN PAYMENT OR CLOSING COST HELP. 

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

HISTORIC HOME IN HOWARD COUNTY offers a view of the past and a state of the art home for today.
The original home dates back to 1899, but the upgrades and restoration offer a home made for comfort and beauty. This property in Glendale also offers a unique features so often requested, but had to find - a GUEST HOUSE. This is the original farm house in the Cattail Creek Farm community.

Howard County - Glenwood - Cattail Creek - Golf Course Community - Luxury Home - 1.35 Acres

Mail Level: Living Room, Dining Room, Kitchen, Family Room, Den, Foyer, Bedroom, 2 Full Baths, 1 Half Bath, Garage

Upper Level: Master Bedroom, 3 Additional Bedrooms, 2 Full Baths

Lower Level: Unfinished Basement (Cellar)

List: $1,240,000

SEE PHOTOS HERE

TO SEE THIS LOVELY HOME, Contact Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-Mail.
Tours arranged all days with 24 hour notice.

SELL A HOME RATHER THAN RENT ONE?  There may be very good reasons. 

AGENTS:  DON’T DENIGRATE YOURSELF BECAUSE YOU SOLD A HOME TO RELOCATING HOME BUYERS. 

I WON’T HOLD IT AGAINST YOU! 

I read a post on ActiveRain this morning castigating agents for selling a home to a relocating family rather than renting them a house.  Trying to make me feel guilty is a total waste of time.  If my mother-in-law couldn’t do it, no one can.  I suppose it was the rather sanctimonious tone of the post that got my attention.  Interesting.  I don’t agree and that may be because our markets are so different.  Sure, real estate is slow, that means that there are some wonderful opportunities out there for our relocating home buyers.  

Further, for most relocating families, renting now simply means moving again in a year and we can’t see into the future.  Also, if there are children, it could mean changing schools again.  If you’ve ever raised teenagers (5 of them for me), you know that to a teenager, their friends are often their life.  Move a teen and you risk ripping their heart out.  Also, in my area, it’s often hard to find rentals in some school districts that suit a family where they may be buying a year from now.

Finally, what about the mortgage interest tax deduction?  That means a lot to higher income buyers. 

Then there’s the matter of planting those spring bulbs and annuals.  Too late to plant tulips here now, but next year????  Who wants to plant a border of Zinnias in a rental? 

IMO, it is a very rare case when a rental is desireable over buying a HOME.

The exception for me is active duty military transferrees.  They have noknowledge of how long they will need to own a home.  I recommend that active duty military transferees rent rather than by and have since 2005 when I saw the market stall and knew that the average home price has exceeded the ability of the average home buyer to qualify.           

Courtesy, Lenn Harley, Broker, Homefinders.com.  Serving home buyers in MD and Northern VA.

HOT OFF THE PRESSES. . . .  Government modified mortgages are defaulting.   Why am I not surprised?

WASHINGTON(MarketWatch) - Office of the Comptroller of the Currency director John Dugan on Monday released statistics showing a high re-default rate on mortgages that have been modified in the first two quarters of 2008.  More. . . . .

Does this surprise any experienced real estate watcher???  I seriously doubt it. 

HEY FHA.  The only persons who could qualify for mortgage modification are home owners who were already in default.

However, If I remember correctly, there are an estimated 25% of all mortgagors who are upside down on their home loan who are not in default.  They do not qualify for mortgage loan modification.  What sense does that make?

The value of this monsterous program has been suspect from the outset.  Many of us questioned the requirement that, in order to qualify, a home owner had to first destroy their credit.  I remember writing about it back in September 1997. 

The results were entirely predictible.

When the average American family owns a home, sees the mortgage payment adjust and through loss of income or other unforseen circumstances, has difficulty making the mortgage payment, they

• Get a second job
• Get a third job.
• Cut back on luxuries.
• Get rid of the 3rd automobile.
• Stop using credit cards.
• Send the child to public school.

For most American home owners, many, actions are taken to change the family budget other than default on the home mortgage or default on any credit account.  Families pull together and help each other make mortgage payments.  

Americans value their credit rating.  They do not default on a mortgage unless they absolutely have no choice.

HOME OWNERS WHO PARTICIPATED IN THE GOVERNMENT SPONSORED PROGRAMS ARE NOT REPRESENTATIVE OF THE MAJORITY OF AMERICAN HOME OWNERS.

MEET YOUR REAL ESTATE SALESPERSON LICENSEE - YOUR FRIENDLY INVESTMENT ADVISOR???

LOTS OF TALK LATELY ABOUT THE RELATIVE INVESTMENT VALUE OF REAL ESTATE AND THE PRACTICE THEREOF BY REAL ESTATE SALESPERSONS OR BROKERS. 

HAVE YOU DONE A JOB DESCRIPTION FOR YOURSELF LATELY?  Are you a real estate salesperson or are you a real estate investment advisor?  As an agent of your supervising broker, what does your license permit you to do?

Inspired by our fellow ActiveRain member William J Archambault Jr who proposes that real estate practitioners sell real estate as an investment, I disagree.   

STRANGE BEDFELLOWS.  Government agencies, the National Association of Realtors, ActiveRain members, et al, believe that real estate agents should be selling real estate as an investment.  I disagree.

RISK ASSESSMENT.  Am I all alone in believing that providing real estate investment advice to home buyers is a high risk practice?  Yes, I’m risk averse.  Even from 2003-2005 when real estate was appreciating at a rate of about 20% a year, I provided buyer clients with information published by our local MLS provider.  The consumer/buyer made their own analysis and determined the relative investment value of the real estate they were considering. 

NO CRYSTAL BALLS WITH MY LICENSE.  Unless a real estate agent or broker has control over the market, no real estate agent or broker can see into the future.  We have experienced economists who can analyze data and provide pricing trends.  Goodness, we have software programs that can take date we provide and return a projected gain or loss based on TRENDS.  This is information available to the public. 

DID YOU PREDICT THE REAL ESTATE RECESSION?  How many of us who sold a lot of rel estate in the years 2002 when rates began to fall through mid 2005 when prices exceeded the average home buyer’s ability to buy beleived or even thought that we would see the real estate market crash as it has today???  I knew that list prices had gotten out of control.  However, few of us had a clue to the perfidy practiced by Fannie Mae and the Wall Street crowds that were manipulating our market behind our very backs.  Giving investment advice in 2005 based on the earlier several years for someone wanting to own a home for the next five years would have left a home buyer in a home in which they probably owed far more than the market value of their property.  Sound familiar??

THE BIG QUESTION.  Is the average residential real estate agent competent to provide investment advice to the average home buyer????

WE HAVE ENOUGH TO DO.  I’m sticking to real estate brokerage and providing fiduciary to my buyer/seller clients based on their desire and need to purchase or sell real estate to be used as a HOME.  My “investment advice” and I do not claim be be providing it, includes providing my buyer or seller clients with a Competitive Market Analysis for the purpose of determining relative market value of a subject residential property.  In my opinion, exceeding that violates the COE and possibly license law. 

I can sell a lot of real estate to be used for a HOME.  Trying to sell real estate as an investment is above my pay grade. 

WHERE TO SPEND YOUR ADVERTISING DOLLARS?  The last thing real estate agents and brokers need to hear in a recession, when every dollar is important, is “just give it a try”.   Advertising dollars should be invested, not gambled. 

Chapter 1 of this series examined the potential value of:

                                                   * * * *  HARD CORE REAL ESTATE TALK  * * * *

REAL ESTATE AGENTS AND BROKERS NEED TO GET A GRIP ON REALITY AND LEARN THE FACTS ABOUT THE HOUSING INDUSTRY IS IN RECESSION.  BY ALL LOCAL AND NATIONAL NEWS REPORTS, IT IS REAL.

A recent opinion based survey conducted by INMAN on December 1st shows that I am not alone in my opinion that the recovery from this housing industry recession may take several years.

However, I don’t rely on opinions.  I rely on FACTS.

FACT OR FICTION?  It is not in my nature to harp, kick that dead horse, or be pessimistic.  However, when it comes to the housing market and the real estate industry, I rely on HARD CORE REAL ESTATE.   I RELY ON MY OWN RESEARCH of the FACTS.  Numbers do not lie. 

• Property values are down.
• Sales volume is down.
• Consumer traffic is down. 
• Unemployment is up.
• The economy is in recession. 

This isn’t necessarily pessisism as much as the results of reality based observation of the facts of my market which is Maryland and Northern Virginia.  Thanks to ActiveRain, I also have a window into local markets across the country.

OUR BROKERS CAN LEAD.  For the survival of agents in our business, it is critical that brokers come to grips with reality.  If the agents and brokers who interact with the public continue to present a rosy picture to the consumer, we will lose all credibility with the home buying and selling consumer.  We sold a lot of real estate when home prices were escalating faster than the contracts could close and buyers were realizing a 20% gain the next year.  We can also sell a lot of real estate today, if we accept the fact that the housing industry is in recession and use that information to formulate our personal business plans.

TURN THIS HOUSING RECESSION INTO OPPORTUNITY TIME.

If we face reality and understand that the housing market is a reflection of the national economy, we will have some credibility throughout the recovery, when it comes, and it will come.

FACT:  The economy is in recession.

FACT:  The housing market is in recession.

FACT:  Foreclosures and short sales are an increasing percentage of active listings of homes for sale and and will continue to increase as home valuations continue to fall, unemployment continues to rise and the government continues to rescue the banks and Wall Street and leaves the average home owner to fend for themselves.  

FACT:  Americans are a home ownership society.  Paying rent on property owned by investors is not an attractive proposal to most consumers.  Even if home owners understand that they will not realize high equity gains for some years, owning a home offers a quality of life that Americans desire.  We’re an independent society and having control of our home drives many home buyers.

FACT:  Many home owners will be unable to sell their homes because the property will not appraise for more than market value which, in many cases, is far less than the mortgage balance.  The move-up market is non-existant for the vast majority of home owners.  Since the move-up market has historically been a large percentage of real estate sales, agents and brokers need to focus marketing dollars and energy on alternative market segments.  That fact will result in fewer sales and reducing sales dollar volume.  This will also probably result in a reduction in the numbers of licensees competing for the reduced number of home buyers.

FACT:  Relief from the government will be targeted to segments of the market that are already in distress leaving millions of home owners hostage to a property with a mortgage balance higher than the market value of their home, making sale of the property impossible.    

ALL OF THE ABOVE CANNOT BE SUGAR COATED BY REAL ESTATE PRACTITIONERS.

However, real estate agents and brokers can survive the market recession if we are smart and quick on our feet.  How?

1.  Sell those foreclosures.  First time home buyers and buyers looking for good prices are excited about the discounted prices offered by foreclosed properties.  Many of the foreclosures on the market today are in locations and communities popular with home buyers.  Learn how to prepare our buyers

2.  Sell short sales.  These properties are discounted and the appraisal are a guide to the bank’s willingness to accept far less than present day market prices.

3.  Sell financing.  Look for marketing opportunities with special financing for home buyers.  First time home buyer financing can make sales happen.  Research grant programs for lower income buyers and first time home buyers.  They are out there.

4. Research loan officers.  Form relationships with lenders who are willing to offer special financing opportunities for your home buyers.  If a loan officer or mortgage company is not willing to help find more than the usual financing, find one that will.

5.  Get a grip on your market.  Last year’s market is gone.  Accept the fact that our average sale price is going to be reduced dramatically for the foreseeable future.  Homes that were selling for $450,000 3 years ago are now selling for $300,000.  Expect to have to work harder to maintain gross sales volume with the reduced sale prices.

6.  Examine your household budget.  It may be necessary to adapt a more modest life style to survive as a real estate sales person in this housing recession.

WHAT IS YOUR JOB GOING TO BE IN 2010?  We, real estate agents and brokers, can survive and thrive this housing recession if we are smart, know the market and be willing to do what works, not necessarily do what we have always done.

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-Mail. 

                          BUYING FORECLOSURES IN MARYLAND AND NORTHERN VIRGINIA

RULES?  WHAT RULES?  Banks are non-learners.  Banks do not know how to sell real estate.  Therefore, they establish systems within their own 4 walls and require/demand that the rest of the world to abide by the rules without even knowing the rules.  Only through experience can we anticipate the usual lack of communication, repeated delays, cancellations and general lack of professionalism that we, as real estate practitioners, have come to expect with contract management. 

ADVICE TO AGENTS.  Don’t complain to your buyer client about the problems associated with buying a foreclosure.  EXPECT THE PROBLEMS and prepare your buyer.  “As we discussed, the bank has not responded to our offer within the time frame that they promised.  No surprise there.  I’ll stay in touch and keep trying to get information.  If they require more information, I’ll get to you as quickly as possible.” 

WHAT RULES?  In fact, I doubt that there are any rules.  Certainly no established published rules as we would know them.  If there were rules, we real estate agents and brokers would learn them and try our best to present contract offers that followed the rules.  We could give timely advice to our home buyers to expedite bank acceptances.  However, banks perform like dictatorships. 

• Banks will dump a contract offer without explanation. 
• Banks will dump a contract up to the date of settlement if a better offer comes in. 
• Contracts mean nothing to a bank.  The addenda give them the right to do what they wish. 
• Banks can counter a contract offer to far above list price without even changing the list price in the MLS. 
• Banks have no sense of what consitiutes fair play or even good business. 
• Banks routinely cancel good contracts because of arbitrary deadlines. 

I’ve sold foreclosures for 25 years.  The process has not changed one bit in all those years with the exception that the volume of properties owned by banks, thanks to their own perfidy, incompetence and greed.  Don’t forget that some of the banks with the largest inventories of foreclosed properties were also some of the largest perpetrators of mortgage fraud.  They’re still around.  They’re just wearing a different hat when selling their “assets”.  They didn’t follow the rules for making the loans.  Why should we expect these banks to treat the consumer with any sense of ethical conducts now??  We shouldn’t and, if we are smart, we will prepare our buyers to expect nothing more.

KNOWLEDGE IS POWER.  Will we continue to offer our services to home buyers interested in buying foreclosures??  Of course.  This is a niche that is timely and profitable for our agents, not because we want to sell foreclosures, but because, at this particular time in our market, foreclosures and short sales offer more value for our home buyer clients than other listings.  However, we know the pitfalls and frustrations for buyers when trying to secure a contract on a foreclosure. 

We closed 3 foreclosures in November.  That’s our job.  If we’re going to look out for the folks below, we’d better work smart and not let our buyers think that buying a foreclosure, while they are sometimes a good buy, can be difficult to achieve the dream of home ownership.

Lenn Harley, Homefinders.com, 800-711-7988.

WHERE DO YOU PLAN TO ADVERTISE YOUR SERVICES IN 2009?  Following is Chapter 1 in a series examining real estate advertising for real estate agents.  Real estate agents are usually the members of a brokerage who generate the sales and manage the transactions that keep our industry alive.  We represent home buyers and sellers.  However, most real estate agents are responsible for generating their own buyer and seller business.  We are also targeted by many entities for whom we, the real estate agents, are the lead. 

HOW DO REAL ESTATE AGENT PROMOTE OR ADVERTISE THEIR SERVICES? 

LET ME COUNT THE WAYS:

• Real estate magazines
• TV advertising (Cable)
• TV advertising (Commercials)
• Radio advertising
• Newspapers
• Internet Pay-Per-Click
• Internet directories
• Web site(s)
• Blogging
• Internet networks
• Floor duty
• Buying leads
• Door hangers
• Open house
• Title companies
• Loan officers
• Cold calling
• Door knocking
• Home buyer seminars 
• Yard signs
• Listing brochures
• Direct mail
• All that I forgot

Over the years and before my real estate life, I’ve used all of the above with the exception of:  Buying leads, Title companies, Loan officers, Cold calling and Door knocking.   Take what you will from this series.  Hopefully, we’ll learn from each other and manage our advertising dollars well in 2009. 

GETTING READY FOR 2009.  Planning your advertising budget will serve to keep you (1) in budget (2) on schedule (3) safe from the cold callers who claim to have a “unique” new web site or place to put an ad.  Where are you going to spend your advertising money?  What advertising media or programs did you use in 2008 and what can you identify that your know produced business, buyers or sellers?

SPEND THOSE ADVERTISING DOLLARS CAREFULLY.  Most agents and brokers who have been in the real estate business for any length of time have probably used many of the advertising ideas above.  Over the years, I have used many with varying results and have come to the conclusion that “it’s all in the numbers”.

YES!  IT’S ALL IN THE NUMBERS.   STOP THROWING MONEY AWAY!   Investigate that medium, service,venue or web site before you spend your hard earned money.  Few agents have the advertising background to be able to determine the ROI (return on investment) for their advertising dollars.  Too often I hear agents try to justify the use of a particular advertising activity with “I got enough business to pay for the ad or leads or . . . . .”.   To have done nothing would have been more profitable because the time and $$$ to manage the advertisement with no positive ROI could have been used for other activities that could have shown a positive ROI. 

In this issue:

Real estate magazines - Real estate magazines were once a great way to advertise listings and make the phone ring in “targeted areas”.   Through consolidation of the areas, the magazines have become less “targeted”.   Further, I can’t justify the cost of an ad in a real estate magazine for an ad that will have a shelf life of 2-4 weeks.  IMO, the magazine ads are only cost effective for large brokerages that can benefit from “institutional advertising” for market share.  For individual agents, the numbers are just not there to justify the high cost of advertising a listing or service.  This medium has changed over the years and agents can now have their own telephone number in the ads.  Still, the magazines do not generate sufficient numbers of contacts to justify the short shelf life and high cost. 

TV advertising (Cable) -Advertising a listing on cable will reach a local audience.  One would presume that the audience would be folks in the market to buy a home.  The cost for these short ads is reasonable and they serve the purpose of satisfying sellers that their listing agent is wonderful.  However, most of these shows are now dominated by new home builders and, like it or not, most resale homes, even the luxury properties, do not show well when compared to the new home builders model homes and well trained new home representatives presentations. 

TV advertising (Commercials) - Very expensive for 10-20-30-60 second spots.  With the exception of institutional advertising for large real estate companies or brokerages, the cost of TV commercials is extremely high.  The production costs for a 30 second TV ad is likely to be several $$$$thousand dollars.  Broadcasting a 30 second ad on cable TV (i.e. Comcast) is going to be $$$$thousands more and the advertiser has limited control over the schedule or placement of the ad in the rotation or area covered.  Local or National media is even more expensive although the ad will reach a wider audience.  However, most individual agents do not cover a geographical area wide enough to justify the cost.  Targeting the ads to a desired audience is not always possible. 

Radio Advertising - Usually cost effective only for large brokerages.  Brokerages who can pay the cost of “drive time” radio spots who can provide quick response to inquiries may benefit.  The wide spread use of cell phones was very helpful to radio advertisers who relied on direct response.  Consumers needing real estate services could respond with a timely (immediate) telephone call.  The key to profiting from radio spots is being available to the consumer when the phone number is broadcast. 

Chapter 2 coming soon:

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-Mail.