It seems that the housing market decline is no respecter of persons.  People who are in high positions of power and authority as well as people who have plenty of money are running into the same problem the rest of us have — they can’t sell their homes.

Two recent articles help to highlight this situation:

• Shelia Bair Can’t Sell Her House as reported on The Business Insider

evidently the Chair of the Federal Deposit Insurance Corporation (FDIC) can’t get her house sold even after dropping the price $100,000.  So she has decided to rent it out until the market turns around.  My only hope is that she lets the rest of us know when that happens.  I know a lot of people who would love to sell their home “when the market turns around”. When?

• For Sale, Still: Grander Homes in Gracious Neighborhoods as reported in today’s Washington Post

this is a story about homes in the $1,000,000 and more category in the DC Metro area that are really having a tough time of it.  Part of the challenge with selling homes in this price range is the mortgage situation.  Jumbo loans are hard to come by and the interest rates and credit requirements are prohibitive.  Not everybody has the actual cash to plunk down on these homes and a lot more have their money tied up in the stock market which has seen a huge decrease over the past couple of years.

I don’t know about you but I take a small bit of comfort in knowing that even if you have lots of money and a great, high profile job (note: Secretary of the Treasury, Timothy Geithner can’t sell his place either) it’s just as hard to sell your home as it is for the rest of us.  Hopefully, they’ll have some empathy for the “little guy” and get this economy back on track knowing that as soon as they do they’ll be able to sell their homes.  This might be a little bit of “enlightened self interest”.  You don’t need an expensive lobbyist to tell you the real estate market is in the tank when you can’t sell your own home!

This program is not acutally up and running yet.  It is in the works.  However, the fact that it in the works is promising and potentially highly beneficial to military homeowners who are being deployed to other areas through no fault of their own.  As we all know, when you sign up to serve ou country in the military you pretty much have to go where they tell you to go. Normally, this is no big deal for homeowners…except for now.

Home prices have declined dramatically and many homeowners are in negative territory where there equity is concerned. This might not be a huge concern to homeowners that have the option of staying put.  My own situation is like that.  I enjoy my home and neighborhood and have no intention of moving anytime soon.  This is not an option for many military homeowners.  They may have bought three or four or five years ago only to find out the military is moving them out.

What to do?

Homeowner Assistance Program

The Army Corps of Engineers has been tasked with administering a program that can help military personnel make up the loss in their equity.  It also helps with the Seller side of closing costs including the Realtor’s fee. So, in effect, the Army is encouraging people to use a Realtor to sell their home.  The Program is called the Homeowner Assistance Program and it can be just the lifeline military homeowners need in order to sell their home and essesntially “break even”.  This is a huge benefit considering that, for many home sellers, the alternative would be to try and get a “short sale” approved by the mortgage company that holds the mortgage on the house.

A “short sale” would be devasting to military families, in particular, since it would destroy their credit and jeopardize any clearance status they may have now or want to get for job advancement. It would also crush their chances of obtaining another mortgage in another area anytime in the near or intermediate future.

There are lots of little details and the extremely important thing to remember is that, at this writing, the Army Corps of Engineers is still awaiting the final regulations to be handed down before they even begin processing applications for the program. It would be a good thing to get started, though.  So, if you are in a military family it might be a good idea to visit the website and download the application.  When it happens it’ll be a good deal!

If you have questions about this program you can shoot me an e-mail or call at 240-417-9100.  Remember, it isn’t finalized yet but it is on the way.  I may be able to help.

Today is the day we, as a nation, set aside in order to honor our military and their families for their service and, in many cases, their lives for our country.  Regardless of our views on wars or the need for national defense, there is no question that these men and women and their families make sacrifices far beyond those of the rest of us.

It’s also a National Holiday with friends gathering together to grill burgers or enjoy the parades.  Here are a few local events:

• National Memorial Day Parade (downtown DC)
• Alexandria Memorial Day Jazz Festival (for all you jazz lovers)
• Navy Band Memorial Day Concert (downtown DC)
• Memorial Day Observance at the Vietnam War Memorial
  (see drawing)
• Rockville’s Hometown Holidays (Rockville, MD in Montgomery County)

These are just a few of the events going on around town today.  Enjoy the day.  Remember our vets.

In a few of my recent posts I mentioned a lot of good reasons why there seems to be an uptick in the market —

• $8,000 First-Time Home Buyer Tax Credit
• Low Home Prices
• Seller Flexibility to provide closing help to the home buyer
• Seller’s with equity in their home have greater “wiggle” room to negotiate
• It’s springtime!

Here are some homes in the area that match all those criteria and are looking for happy new owners.

Feel free to give me a call at 240-417-9100 if you want to make an appointment to view any of these homes!

You may not realize it from all the marketing and hype around how we Realtors tend to think of ourselves (”multi-million dollar producer”, “#1 agent in [fill in the blank]“, etc.) but the general home buying and home selling public really doesn’t think very much of us, as a group.

Sure.  In order to call ourselves Realtors we commit to abiding by the National Association of Realtor’s Code of Ethics. We are regulated by the various States where we are licensed to work. We can only renew our license by participating in continuing education and some of us even go the extra mile to earn professional designations which require additional levels of experience and education.

No matter.

Year after year, a Gallup poll suggests that Realtors are near the bottom of their Honesty and Ethics Poll from November of 2008 — even below Bankers and Lawyers (but above Congressmen!).

Pricing Your Home For Sale

This is never more evident that when a Realtor sits down with a potential home seller to discuss what price the seller’s home should be offered for in the marketplace. We Realtors will complete a thorough Comparative Market Analysis showing homes that are similar to the home seller’s house and in the same neighborhood or very near by. Homes that are currently on the market (the competition), homes that are under contract and homes that have sold recently.  However, no matter how thorough Realtors may be and how much real, empirical data Realtors may be able to provide, there is always the emotional context to consider. Most home sellers have a strong emotional bond with their home even thought they have made a decision to sell it.

If you combine the emotional bond of the home seller with his house with the inherent suspicion that the Realtor just want to “price the house low for a quick sale” and doesn’t really have the interests of the home seller at heart you can sometimes end up with a house that’s priced too high for the market.  It ends up sitting and sitting and sitting on the market with no offers and, sometimes, no visits to the house by potential buyers.

A Solid Alternative For Pricing Your Home For Sale

Happily, there is an alternative.  It’s called a Pre-Listing Appraisal.  It’s ain’t free — anywhere from $300 to $400 in the MD Suburbs of DC. However, it will take a lot of the guess work out of the process and it take the Realtor’s self interest in getting the listing out of the picture, too.

There’s a wonderful article by Rita Bradley , a California Property Appraiser, that talks about the benefits of a Pre-Listing Appraisal.

Also, don’t forget that in an effort to win your business, some agents tend to recommend an asking price that’s on the high side. This could be disastrous for your finances. When you hire an appraiser you will get an un-biased opinion of what your home is truly worth. The appraiser has no incentive to value your property too highly.

— from Sell Your Home Fast - Obtain a Pre-Listing Appraisal

I completely agree. In fact, I like this concept so much that I’m willing to offer a Pre-Listing Appraisal for any of my clients that want one — on my dime. I’ll still prepare the Comparative Market Analysis and I’ll remind my clients that the  buyer’s mortgage company or bank will order another appraisal anyway.  However, it’s a whole lot more likely that a Pre-Listing Appraisal will:

1. create more activity by potential buyers visiting the home because it’s priced competitively
2. eliminate any surprises when the appraiser for the buyer’s mortgage company does their job
3. create an offer from a potential buyer that is closer to the list price
4. create an offer sooner rather than later

There is no perfect solution to pricing your home to sell quickly in a market as volatile as this one.  Getting an objective appraisal is a great start.

If you’re interested in knowing more about the appraisal process or if you’re interested in knowing what your home may be worth in today’s market, just shoot me an e-mail or give me a call at 240-417-9100.

If you think you may be relocating anywhere near Andrews Air Force Base, this house may be for you.  It had new roof put on in 2008, new carpet and flooring throughout the home in 2008 and freshly painted. The home has a very large, fenced back yard and a multi-tiered deck accessible through sliding glass doors from the family room.

Even if you’re not working on or near Andrews Air Force Base, the home is minutes from RT 5 and just a few more minutes to the Washington Beltway.  This home is in a quiet, tree-lined neighborhood of homes where people really care for their houses and their neighbors.

The best part is that the home is owned by a Seller that can make a quick decision about any offer.  This is a “regular” sale.

In this current environment, it’s difficult to find a home that is competitively and affordably priced and in good, move-in condition .  Many homes are in short sale or foreclosed status requiring the banks to give their blessing on any sale.  This usually adds many months to the process of buying a home.  It also means the home may be in a state of serious disrepair and is being sold in “as is” condition — no repairs, what you see is what you get.

So, it is refreshing when a home comes on the market that:

1. Is in good, move-in condition,
2. Has lots of great upgrades — remodeled kitchen, renovated bathrooms,
3. Is reasonably priced,
4. Is owned by a Seller that can make the decision to sell — no “third party approval” needed.

This home, located in College Park, MD and has lots to recommend it:

• within minutes of METRO
• a short hop to the University of MD
• quiet, tree-lined street
• a real, working  sauna
• fully finished “walk-out” basement
• tons of storage areas

This home is eligible for all types of home financing such as VA, FHA and Conventional mortgages.  If you are a first-time home buyer, you will also qualify for The $8,000 First Time Home Buyer Tax Credit.

In a previous post about the importance of appraisals, I mentioned that no matter what the Seller wants or what the Buyer wants, it’s really what amount the bank is willing to lend.  Credit standards are tighter so the individual requirements for obtaining a mortgage are tighter. However, no matter how well qualified a particular home buyer may be the bank will not lend more money that an objective appraisal says the home is worth.

Recently, a client decided to obtain an appraisal for their home.  Yes, they were shocked that the number that came back from the appraisal wasn’t as high as they wanted.  Yes. It would have been nice if it was higher. Yes. They want to sell their home so they adjusted the price to the appraised value.

Now, I’m sure the house will see a lot more visitors and probably get a decent offer.

The end result will be happy Sellers who have sold their home.

Depending on who you listen to or what Internet site you surf it was either 3° or 7° when I went outside to pick up The Washington Post from the end of my driveway.  Even though there was no wind,  it was c-o-l-d.  I could feel the air going through my nose and making it feel kind of funny.

How Cold Affects Showing Homes

In a general way, showing homes in the cold is no different from showing homes in any type of weather.  If the home is still occupied by the owner and they agree to have their house shown, you and your Realtor just toodle on over and view it.  If it’s a vacant home, your Realtor logs in the appointment with the listing agent or showing service and you go on over.

Still, it means that you really need to bundle up and be prepared for the cold.  Many homes that have been vacant for awhile are very cold inside since the heat has been shut off or turned way down for an extended period.  Hopefully the owners or the banks, in the case of foreclosed homes, have “winterized” the homes so that water pipes don’t freeze and burst creating flooding that will lead to mold and worse.

It’s also important to think of the “other guy”.  The other guy could be your Realtor or, if you’re the Realtor, the other guy could be your client.  Don’t leave each other “out in the cold” with the car running or standing around outside waiting.  As inconsiderate as this is during nice weather, it’s really bad news during the times when temps are in the teens or below.

More on Vacant Homes

In this market there are lots of homes that are in “short sale” status.

This means that the current owner/Seller still owns the house and is responsible for the upkeep and maintenance of the property. The problem is, many times, the owner/Seller has walked away from the house.  That’s right.  They have actually moved out of the house and, quite possibly, mailed the key to the bank.  In this case, the houses might not only be cold (they most certainly will be) but they’ll be dark after the sun goes down since the owner/Seller has probably stopped paying the electricity bill, too.

My guess is that if you’re looking at homes in this weather than you are a serious buyer who really wants to buy a home.  If you’re selling your home during these winter months it means you really want to sell your home. The important thing to remember is to:

• bundle up,
• come prepared with a flashlight and
• your notepad.

If you’re interested in seeing a home - in any weather - just shoot me an e-mail or give me a call at 240-417-9100.

As we all know, there are lots of people who are in deep trouble with their mortgages.  The bought their house during the “frenzy” with ARMs and other exotic mortgages and now the time has come to pay the piper.  The rates adjusted upward and now their monthly payment is unaffordable. Worse, yet, is that the value of their home has declined and they can’t even refinance into a fixed rate mortgage or something else to keep their payments affordable.

They’re what we call “under water”.

Thus, people threw up their hands and either flat out walked away from the house without making another payment or tried to sell the house in a short sale in the hopes that the bank will let them off the hook.  Others are declaring bankruptcy and staying in their homes (where else would they go?) until the sheriff shows up at the door with the eviction notice.

Bad news all the way around.

Another Scenario

There is another scenario which is not quite as dire but equally disappointing.  It’s about the homeowner that bought their house near the beginning or middle of the “frenzy”.  Maybe they bought it with a fixed rate mortgage (a lot of people did, believe it or not).  The interest rate was good.  The payment was very affordable. Best of all, prices were climbing.  In fact, they weren’t just climbing they were skyrocketing.  In the MD Suburbs of DC is was not uncommon for homes to appreciate about 25% per year.

So this homeowner who bought their house at a “low” price decides to refinance and take some cash out of their new ATM machine (”the house”) or take out an Home Equity Line of Credit (HELOC) which comes complete with a checkbook and debit cards that look just like Visa cards!  Wooooo! Hooooo!

What do you do?

• pay for the kids’ college tuition
• buy a new car
• take a nice vacation
• get the big flat screen you always wanted
• put an addition onto the house
• new carpet, new kitchen, new bathrooms, new….new….new.

Sounds great doesn’t it.  That’s exactly the way refinancing and equity lines were marketed, too.  Prices would go up forever.

What Happens When Prices Don’t Go Up Forever

When prices eventually stopped rising and then started falling people could no longer treat their homes like an ATM machine.  They couldn’t continue to take money out of the house.

Here’s the really sad part: they can’t sell the house either. You see, in this scenario, the homeowner is still able to make his or her monthly payment. It’s just that they have already taken all the equity out of the house and now they no longer have any room to be able to sell the house, pay the costs of selling the house and move anywhere else.  Literally, they are stuck.  The bank is not going to “let them off the hook” just because they already enjoyed their equity.

Here’s some of the breakdown:

• ½ of the transfer and recordation fees due to the State and County governaments (~2.4% of the sales price of the house)
• fees due to settlement company to conduct settlement and transfer legal title to the new owner
• paying off your mortgage or any additional mortgage or equity line
• credit to the Buyer for their closing costs (could run anywhere from 3% to 6% of the sales price of the house)
• any property taxes that might be due
• and home owner association fees that might be due

Do you know what’s missing from this list?  Give up?  It’s the fee for your Realtor!  That’s right.  Even if you sell your house For Sale By Owner, you’ll still have quite a few pennies to shell out in order to sell you house.  Even if you sell your house For Sale By Owner you may still need to pay a Buyer’s Agent (after all they represent most of the buyers out there), you’ll have to pay any marketing costs for advertising, etc.

So assuming that you do it yourself, it still ain’t free.  You still need to factor in what we, in the profession, refer to as the “cost of sale”.

What’s The Solution

Unfortunately, there is no good solution.  The bright side is that you have a place to live in a home you really liked when you bought it.

So sit back, relax, enjoy your home.  Make yourself a glass of iced tea or hot cocoa.

Continue to pay your mortgage. Pay some additional principal, if you can.  Pay off the equity line.  Get ready.  Save.

If you’re interested in how you’re doing or if you should try to sell or “stay put” for awhile, shoot me an e-mail or call me at 240-417-9100