College Park Woods is a quiet community of slightly less than 500 homes near the University of MD.  It has a wonderful community pool, a small park and solidly built single family homes in about four architectural styles.

I’ve been serving the College Park Woods community since 1999 - helping people sell their homes - as they get ready to retire and downsize or move on as the result of a job opportunity or just moving to another area. During the “frenzy” of 2000 - 2005 houses in College Park Woods sold just as fast, if not faster, than comparable homes in the area.  This was mostly due to its excellent location near the University of MD, METRO and a variety of other large employers (USDA, NASA, The Washington Post) and easy access to shopping and commuter routes (the Beltway, RT 50 and RT 95).

The Slowdown

Home sales in College Park Woods remained strong, if a little slower, through 2006.  Home sales really didn’t start to slow down until spring of 2007.  Yet when it did slow down…it really slowed down.  Short sales started to pop up.  People who had bought homes in the early ’00s using Adjustable Rate Mortgages (ARMs) or interest-only loans or a variety of other “exotic” mortgages found that they couldn’t keep up with the payments when the interest rate adjusted upward causing their monthly payment to increase.  They realized, also, that the value of their home had decreased, mortgage standards had gotten significantly tighter and they were unable to re-finance.

This created a challenge for the folks who had plenty of equity in their home.  People who had been paying their mortgage for years, had purchased their home at a low price (relative to today’s prices) and were not “in trouble” found that because of declining home values and the huge influx of the number of homes on the market, they could not sell their home quickly or for as much as they would have hoped.

In fact, in the last year only 6 homes have sold in College Park Woods and it took an average of 123 days for them to sell.

The Miracle of College Park Woods?

The last home that sold in College Park Woods went to settlement on August 15, 2008. It was a nicely updated split level with a nice addition and great kitchen.  Even so, it took 111 days to sell.

Then came 9312 Saint Andrews Place. This home is on a corner lot with an attached garage and beautiful woods behind it.  The owner had made some upgrades and the house was in great shape.  We found a buyer within 76 days. It settled and ownership transferred on December 30, 2008.  A nice belated Christmas gift for the previous owner.

The “Creative” Part

The buyer of this home decided to get creative with the financing.  It was all perfectly legal and the buyer was well qualified to make the purchase.  His intent was simple. He wanted to purchase a house near the University of MD so that his son and some friends could live in it during their years at the University and then sell it (or perhaps continue to hold it as an investment property) in four or five years.

The beauty of this was that he and his son were able to obtain a government backed FHA mortgage and take advantage of a number of opportunities:

1. a low down payment (3% in 2008)
2. preferential interest rate for owner occupied property
3. 30-year fixed rate
4. non-owner occupant eligibility
5. the $7,500 tax credit for first-time home buyers

You see, FHA requires that at least one of the people on the mortgage and title live in the house.  That would be the son.  It doesn’t matter that the owner occupant may not have the financial ability by himself. As long as the co-signer (the father, in this case) can qualify, they’re good to go.

I wrote about this at some length in this post.

So, it’s not impossible to sell houses in today’s market despite what you hear on the news.  If the price is right and the condition of the home is good they will find a buyer.  Mortgage interest rates are extremely attractive making homes more affordable. Sellers still have to make an effort.  A good Realtor helps (that would be me!).  It can be done.

Interested in how you might get good results like this?  Shoot me an e-mail or give me a call at 240-417-9100.

Is there a house in your future in 2009?  Interest rates are low (in the low fives and high fours). Homes prices have come down substantially.  Sellers are motivated to help make it happen.

Here are a few suggestions:

5709 Butterfield Road, Clinton, MD 20735
This single family, Colonial style home is located within minutes of Andrews AFB. It recently got a nice face lift with a brand new roof, brand new carpeting and flooring throughout the house and a new paint job. Click on the link for photos, a Virtual Tour and lots more information.  Offered for $314,900.

5918 Bryn Mawr Road, College Park, MD 20740
This is another single family, Rambler style home with a fully finished basement. It has lots of updates and upgrades throughout the house - a great, remodeled kitchen, updated baths, beautiful french doors that open up the space nicely. It even has a working sauna! It’s very close to the University of MD and METRO. Click on the link for photos, a Virtual Tour and more information. Offered for $349,900.

11322 Cherry Hill Road, Beltsville, MD 20705
This is the perfect condo for someone who wants a little privacy combined with a convenient commute to the University of MD, the USDA complex, NASA Goddard Space Flight Center and more. It has assigned parking and a community pool and tennis courts. Click on the link for photos, a Virtual Tour and more information. Offered for $149,900.

All these homes are being sold by their Sellers without any “third part approval” needed. In other words, these are “plain vanilla” sales that have Sellers ready and willing to work with qualified Buyers.

Don’t forget — first-time home buyers qualify for $7,500 tax credit. So it makes these homes all that more attractive.

As 2009 approaches I’ve been looking into my crystal ball to see what might be coming down the pike.  Here are my predictions:

1. The FHA down payment requirement increases from 3% to 3.5% decreasing the already small pool of moderate income home buyers in the market.
2. The $7,500 first time home buyers tax credit will become permanent and become a real tax credit - not the faux credit it is now.
3. Mortgage interest rates for 30 year fixed mortgage will drop to about 4.5% - give or take a ¼%.
4. Qualifying for a mortgage will still be difficult for moderate income folks with strict documentation requirements holding in place.
5. Banks will begin to work faster to allow “short sales” to actually sell since it will take lots longer to actually foreclose on a house and they’ll be losing money anyway.
6. As “short sales” and bank owned foreclosures sell, the housing stock will get smaller and prices will stabilize.
7. The media will begin to “talk up” the price stabilization story causing home buyers with pent-up demand to come into the market to buy houses.
8. The Obama Administration people will want to buy houses because they see a “good deal” but will need homes in “move-in” condition since they won’t have time to mess around with repairs or renovation.
9. BRAC (Base Realignment Commission) movement will start in 2009 and help the area around Ft. Meade. Bank owned and “plain vanilla” sales will be key.  These folks won’t have the time to wait for short sales to work through the process. Price will be king. Fixer uppers will be OK.
10. Finally, 2009 will be the last “down” year. By 2010 home prices will have bottomed, the number of homes on the market will be smaller and people will have been saving their pennies for the down payment needed to buy a house.  Rent prices and monthly mortgage payments will be roughly equivalent making home ownership attractive.

So there you have it.  My top ten for 2009. It’ll be interesting to look back at this in a year to see how right (or wrong) I am.

As we have all heard more times than we can stand, the housing market is in a slump with foreclosures and short sales in plentiful supply.  The problem with this is that it floods the market with an excess number of homes that a limited number of buyers can qualify to buy. Combine this scenario with a very difficult mortgage environment where only the “A” type home buyer - good credit, low debt-to-income ratio, good income - can qualify for a mortgage and you have a double whammy.

Let’s pretend you qualify for a mortgage.  There are three types of home sales out there:

1. Foreclosures - the bank actually owns this property and someone at the bank can actually make a decision about whether or not to sell it to you based on the financial terms of the offer.
2. Short Sales - the bank doesn’t legally own the property and the Seller cannot sell the home for as much as he owes on the mortgage.  The Seller is “short”.  Sometimes the Seller is very short.  In all cases, the bank must approve the sale since they are agreeing to take a hit on the mortgage.  This is most often referred to as “Third Party Approval Required” in the listing description on real estate web sites.
3. Conventional or “Plain Vanilla” - this is the type of sale most people are think about when they think about buying or selling a home.

Why Plain Vanilla Is Best

Sure, you might be able to get some “good deals” with either the Bank Owned properties or the Short Sales but wither of those two scenarios you are buying the home in total “as is” condition without any repairs to be made by the Seller (in the case of a short sale) or the bank (in the case of a foreclosure).  You also have to have the patience of Job if you want to buy a short sale. Banks typically take from four to six months to work through the process of approving your offer and there is no guarantee they will approve it.

The conventional, “normal” or “plain vanilla” type sale is a whole different experience. Here’s why:

1. Most often the Seller will have equity in their home.  Thus, they have room to negotiate financial terms including concessions to pay Buyer closing costs.
2. They are most often willing to make repairs based on a home inspection depending on the scope and cost of the repairs.
3. They can make decisions quickly so you will know what the Seller is or is not willing to do within a short period of time.
4. Settlement can happen quickly. Depending on individual circumstances on both the Buyer side and Seller side the entire process can take as little as 30 days from the date an offer is accepted to the date everyone is sitting at the settlement table.

When A Deal Is Not A Deal

Sure. Some of the foreclosed properties really are “deals”. Most of them are not.  If you figure in the cost of repairs, the time spent dealing with the bank it make not be a nice as you would think.  Short sales are even worse because the time frame is much longer, there are the repair issues and, possibly, title issues with liens and such. Still, if you have patience and perseverance this might be a good way to go.

Just don’t get too crazy after watching a lot of midnight infomercials.  Sometimes “plain vanilla” can be just as sweet.

Yesterday the Federal Reserve lowered the famous “Fed Funds Rate” to between 0% and .25%. This means that the money that banks borrow from the Fed or among themselves is, realistically, “free money”.

According to the mortgage professional I refer my clients to most, Alan Gross of National City Mortgage, this change had an almost immediate effect on home mortgage rates. Mortgage interest rates for conventional, 30-year fixed mortgages are now below 5%.

Can Anyone Get These Great Interest Rates?

Absolutely.  Anyone with a good credit score, money in the bank for a down payment and verifiable documentation for employment and assets (bank accounts, retirement accounts, etc.).  You see, even though rates are are hugely attractive levels - and remember these 30-year fixed mortgages - the mortgage people are still only lending money to those who qualify.

In fact, in Maryland the law requires lenders to prove - with documentation - that the borrower has the ability to repay the mortgage. So, for moderate income and first time home buyers, the FHA mortgage is still the way to go.  Luckily, the rates for FHA mortgages follow the conventional market and are sometimes even lower!

First Time Home Buyers Dream

These low rates are now making home ownership for first time home buyers much more realistic and completely doable.  The low rates translate directly to lower monthly mortgage payments.  So it makes it that much more attractive to get serious about buying a home.

lower sales prices for homes+
seller concessions for closing costs+
extremely low mortgage interest rates+
=a very affordable way to buy a house.

And don’t forget that there is a $7.500 tax credit for first time buyers that is still in effect.  So it makes buying your first home that much easier.

The best part is that there are lots and lots of home in the MD Suburbs of DC that are not short sales and can be bought within a reasonable time frame.

Are you curious about what mortgage rate you qualify for and what a monthly mortgage payment would look like for you?  Shoot me an e-mail or call at 240-417-9100.  It’s free.

Great negotiating skill is one of the greatest values a good Realtor can bring to the table. By using his knowledge and expertise, a Realtor has a good sense of what can realistically happen in any given transaction.  Negotiation doesn’t stop at price or other financial terms, either.  It continues through the entire process from offer to settlement.

One of the critical junctures in the process is the home inspection. A buyer will bring in a home inspector to go over the home with a fine tooth comb looking for anything that could be wrong.  The inspector will look at the electricity, plumbing, heating and air conditioning and many other aspects of the house that the seller probably hasn’t thought about in years, if at all.

Since the buyer is paying for the inspection and since the home inspector is getting anywhere from $300 to $400 or more for a few hours work you can believe that the home inspector will find a few things in your home that need repair or replacement.  Sometimes there is a huge list of things…and it can all add up to serious money.

Negotiating the Outcome of the Home Inspection

At this point, the buyer needs to think long and hard about whether or not to continue with the process to settlement and buy the house.  If there are some seriously egregious things wrong with the house (a foundation crack or serious roof issue, for example), the buyer may just want to back out completely and look for another house.  If there is just a list of smaller things - a leaky faucet, some outlets that aren’t working properly - they may want to ask the seller to repair or replace some items on the inspection list.

As I mentioned in a previous post, it’s OK to ask for whatever you want.  After all, if the seller agrees to make all the repairs your house will be in just the condition you want it to be in.

On the other hand, it is also important to “know when to hold ‘em” and “know when to fold “em”.  In other words, what is really important to you to have repaired or replaced.  Pushing to hard for cosmetic items like cracks in tile or dirty carpet may just push the seller over the edge.

If you’re the seller, it’s important to understand that, for buyers, this is their single biggest expense in their lives and they’re probably singing a 30-year mortgage, to boot.  It’s also important to realize the end goal: to sell your house.

Let’s Work Together

There are important considerations on both sides of the transaction and it’s really up to the Realtor - the person who has been through this process many times and does it for a living - to sit down with his client and have that heart-to-heart talk about what’s important and what’s not.

Then it’s time for the Realtors - representing their clients - to talk to one another in a civil manner to reach agreement.  Both sides end up giving a little.

I’ve never met a seller yet who loved doing all the repairs requested by the home buyer especially after some hefty concessions on the front end at the time of the offer. I’ve never met a home buyer that didn’t want the seller to fix everything and then some so they wouldn’t need to do anything once they moved into the house.

The bottom line is to know what’s important and to know why you want to buy or sell the house. If you keep those two things in mind and have that heart-to-heart with your Realtor, the rest will fall into place.

Many years ago, before the huge frenzy of a Seller’s market we had in the early ’00s, parents sometimes invested in buying a home for their kids during the years they went to college. Many times they would put their children on title and the mortgage as a way of teaching the responsibilities of home ownership as well as the many benefits of home ownership.

As the years passed and the kids graduated from college to move into the world of work, the parents would sell or gift their ownership interest in the house to their children or rent it out as an investment property or outright sell it. The real benefit of owning a home during the kid’s college years was that the parents actually got a financial return and the kids had a place to live.

Why College Park, MD Is Prime Real Estate For “Kiddie” Homes

College Park, MD is home to a pretty large university - the University of MD. As I understand it there are well over 35,000 students. And that’s only the undergraduates.  A lot of those students are housed on campus.  A lot must look for homes off campus either in various condo buildings scattered around College Park or in single family homes owned by investors.  In fact, there is a great shortage of off campus housing for students.  That’s what makes College Park, MD such a great place to own real estate.

So wouldn’t it make sense to own instead of rent?  Let’s see how.  Here are two ways to do it:

1. Buy a home outright as an “investment” property.  This means that you don’t plan to live in it at all.  You plan to buy it, rent it out to people you don’t know (or your kids) and then sell it sometime in the future.  This way requires excellent credit (over 680) and at least a 20% down payment. Plus the interest rate will run ¾% to 1% over the current market rate. Ouch!
2. Buy the home with an FHA mortgage with at least one family member (presumably your kids) living in the house and named on the title and mortgage. The credit score requirement is much more flexible, the down payment requirement is currently 3½% and the interest rate is the “owner occupant” rate - currently around 5½%. Yay!  Less money down, smaller interest rate, less than perfect credit allowable.

What’s The Catch?

The catch with FHA mortgages is that at least one of the folks on the mortgage must occupy the house.  They don’t have to qualify for the mortgage in any other way - income, job, credit score.  That’s the job of the non-occupant owner - the parents or other family member. The income and debts of all the people involved are taken as a group and then used to qualify for the mortgage.

Sweet, huh?

This also works for older folks as well. Say you have an elderly parent or grandparent that you want to move close to you (but not in with you). You can use FHA mortgages to buy a small condo or rambler down the street from your place for the elderly parent so you can peek in on them from time to time. They get to keep their independence and you get to keep your sanity while enjoying a great real estate investment.

If you’re interested in more details about how this might work for your kids or any other member of your family, just shoot me an e-mail or call at 240-417-9100

Here’s a confession: I’ve never watched a whole episode of Desperate Housewives.  I just like the title. However, based on what I am seeing in the marketplace, it would seem like a lot of home buyers believe that there should be a show call “Desperate Home Sellers”. Buyers are offering financial terms way, way below market and then requesting extensive repairs based on the evaluation of zealous home inspectors. Sellers, in turn, are feeling pinned to the wall and more than a little stressed about the sale of their home.

The Purpose Of A Home Inspection

A home inspection is a good thing. It provides both the Seller and the Buyer with a fairly accurate picture of any items in the house that need either repair or replacement.  I use the phrase “fairly accurate” here because, as all reputable home inspectors will tell you, they are generalists.  Not specialists.  In other words, they can point out areas that they think may need to be addressed by specialists such as electrical problems or plumbing issues.

Home inspectors will generally point out normal maintenance items as well.  Hot water heaters that may still be fully functional but a little older and should be monitored.  Ditto heating and air conditioning systems and the roof. A good inspector will point out the difference between a maintenance item - what a home owner may normally be expected to repair or replace over the time they live in the house - and items that really should be repaired or replaced sooner rather than later.  In fact, there are some items that really should be repaired by the Seller prior to settlement.

Reasonable Expectations

In the current market there are lots and lots of short sales and outright foreclosures. In addition to the generally lower prices of these types of homes they are also sold in “as is” condition.  What this is telling the potential home buyer is that either the home seller cannot afford to make repairs - as in the case of a short sale - or that the bank has already discounted the price of the house to the point where they will absolutely not make any repairs regardless of condition.  In both cases, a home inspection is still a good idea but the home buyer cannot expect any repairs to be performed.  After the inspection, the home buyer must make a decision.  Buy or Don’t Buy.

Working with home sellers that have a little bit of equity in their home and don’t need bank approval for the sale of their house provides everyone with a little breathing room.  Unfortunately, many home sellers will provide most, in not all, of their available financial concessions up front.  So, when the repair items come along, they have been tapped out.  They feel like they’re being squeezed.

This adds a lot of resentment and general bad feelings to the transaction and it is at this point - the home inspection - that many home sellers dig in their heels and the transaction begins to fall apart.

Why Do You Want To Buy The House?

There are certain contractual obligations the home seller is required to meet as far as home repairs are concerned.  Electrical and plumbing issues need to be addressed and the normal systems of the house like the heating and air conditioning need to work.  Cosmetic repairs like fading paint or cracked tile or old kitchen counters are just part of the house.  If the home buyer wants those fixed it really is all part of the joy of home ownership.

It’s at this point the home buyer needs to ask themselves, “Why do I want to buy this house?”

If the reason is that the house has great potential, is in a great neighborhood, a convenient commuting distance to work or whatever other reason the house appealed to the home buyer in the first place than the transaction should proceed without a long laundry list on minor repair requests.

A Conversation With Your Realtor

Sure, it’s OK to ask.  Who knows?  Maybe the home seller will fix whatever you want. However, it is at the point of the home inspection where the home buyer really needs to know what they can handle as part of the experience of home ownership and what really needs to be done. If the home buyer asks for every minute flaw to be fixed there is a good chance they will find out they are not in their own private episode of “Desperate Home Sellers”.  They may find that the home seller is willing to let them walk away.

It’s always good to review the home inspection report with your Realtor with an eye to whether or not you really want to buy the house that has just been inspected.  If you do want to buy it then you need to know there are some things you may need to do yourself after you’ve moved in.  If you find that there are too many flaws with the house or that there are some serious big ticket items that need repair or replacement, it may be time to walk away.  This is where an honest conversation with your Realtor has tremendous value.

In recent years there has been a new industry that has grown up around “staging” homes to sell.  Simply put, this means that someone with some design sense comes into your home to rearrange things or add things in order to make your home look like a picture from a magazine.  The idea is to make your home as appealing as possible to potential buyers.

In general, I agree that staging is a good idea.  If you’ve ever gone into a model home for a new subdivision, you know what I’m talking about.  The model home is awe inspiring.  Everything is “just so”.  It’s clean, neat and not a speck of dust anywhere to be seen. The accessories are perfectly placed and the art on the wall is both neutral and attractive. It makes you want to buy the home!

The Upside To Staging

Professional stagers will tell you that creating just the right ambiance and atmosphere in your home will help you sell the home more quickly and for a higher price.  That’s all true.  At least, I believe it is.  It makes sense.  After all, a home is much more appealing if it’s clean and clutter free than a home with dishes in the sink, dirty laundry on the floor next to the washer and the carpets in need of a good vacuuming.

If someone comes in and simple rearranges your furniture so that your house looks a little more spacious and welcoming, it’s worth it.  If a stager brings a few knick knacks to highlight your color scheme or make a bedroom or bathroom more inviting, there is a great chance that a potential buyer will become emotionally attached to your house and want to buy it.

I have worked with sellers that have had their home professionally staged and kept it that way until a buyer came through with an offer to their liking.  It is almost always a great offer.

Almost.

The Downside To Staging

The catch is keeping your home in the condition the stager left it in.  That means you have to keep up with the dishes, make the bed, dust and all the other mundane chores of keeping you house looking like Martha Stewart came by to visit.

The other downside is that having your home professionally stage to sell costs money.  That’s right.  Ain’t nothin’ free in this world and the person who comes into your home to make it look pretty is gonna charge you something. How much really depends on what they do or need to buy to make you place look spectacular.

To Stage Or Not To Stage

In my mind, the real deal with staging is this: “Will anyone see it?”

You see, if you spend a lot of money on staging and no one is walking through your front door to admire the great and wonderful ambiance of your newly decorated home it is really money down the tubes. So you have to do something else.  You have to price the home correctly!

If you have equity in your home and you have the ability to price your home so that it is both attractive and affordable, staging may not make a difference.  Someone will buy it anyway.

If you spend a lot of money on staging and you want to “make it back” in the price of your house, you’ve just thrown your money away.  No one will walk through the front door.

So, it’s really a combination of both price and condition.  Price is key.  Condition is where staging comes in and where you need to make the decision to:

a) spend the money and

b) keep you home in “staged” condition.

If you are wondering more about how professional staging can help sell your house, drop me an e-mail or give me a call.  I can refer you to a great professional stager.

I was listening to an interesting story on CNBC a little earlier to day.  It seems CNBC was confirming a story in the Wall Steet Journal that the Federal Government was going to use mortgage giants, Freddie Mac and Fannie Mae, to push down mortgage rates to around 4.5%.

This would be a huge benefit to both current homeowners and people who would like to buy a home.  People could refinance out of subprime mortgages or ARMs and keep their payments affordable.  New home buyers will now have homes that are more affordable.  Home sellers would be able to sell their homes a little bit more quickly and, maybe just maybe, it would help stabilize home prices, in general.

You Still Need Good Credit

You’ll still need to have great credit scores, money for a down payment and full documentation of income, assets and employment.  However, it is still highly likely home buyers will be able to get concessions from sellers in order to pay closing costs.

The important thing would be to talk to a highly reputable and experienced lender who can help you work through either the refinancing of your home or the purchase of your new home.

This is still “just talk”.  Nothing has been set in concrete yet but if the Wall Street Journal is reporting it and CNBC is confimring, the chance are good that it’s coming down the pike.

Something that might interest you?  Just click on the Comment link at the top and let me know…or e-mail me.