One of the real disappointments of the glut of short sales and foreclosures on the market is that both the pricing and the condition of the houses are pretty inflexible. They are what they are.

A House Near Berwyn Heights

In my previous post I mentioned the sale of one of my listings in College Park Woods.

This home is “across town” (which isn’t really that far).  It’s a few blocks from the Town of Berwyn Heights and it’s till very close and accessible to the University of MD, METRO, and the main commuter routes of the Beltway, RT 95 and the Baltimore/Washington Parkway.

I had interviewed with the Sellers quite a long time ago and, yet, for reasons of their own, they decided to use a Realtor based out of Columbia, MD to sell their home.  The Realtor didn’t work out so I came into the picture.  We priced the home well and I implemented my marketing blitz.  Still it took 111 days to attract a buyer.

A buyer recently made an offer and because they have been involved in the home buyer program offered by NACA (Neighborhood Assistance Corporation of America) the financing was all lined up and ready to go.The program offers great home buyer education, access to mortgages with highly competitive rates and the first-time home buyer tax credit of $7,500 for qualified buyers.

There is nothing better than a financially qualified buyer who wants to buy your home.

Next Steps

We are now working through the home inspection phase. After that, it’s the appraisal phase and then onto settlement.

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

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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.

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Prices have declined, it takes longer to sell homes even when the Seller has plenty of equity in their home and is willing to fix it up and “pretty it up” for the home sale.  Slowly but surely, I think we are beginning to see some stabilization.  However, I still think we are in for a rough patch.

I’m guardedly optimistic about 2009.  More to the point, I am not going anywhere.  I am committed to remaining in the real estate profession - full time - to serve the home buyers and home sellers in the northern Prince George’s County and southern Montgomery County area.

So break out the noise makers, the party hats and the champagne!  Welcome 2009!

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During the “plain vanilla” type real estate sales the inspection is a place for things to get bollixed up.  The Seller and the Listing Agent are rarely at the home inspection since the idea is to give the Buyer and his home inspector free reign to do a thorough inspection.  So it is really up to the Buyer’s Agent to be very clear when writing out the Inspection Addendum which will list the items the Buyer is requesting be fixed.  That way when the Seller and the Listing Agent sit down together to go over the repair items there is no question about what the Buyer wants completed.

When Communication Breaks Down

If the written word isn’t clear and the Buyer’s Agent is unsure of how to describe one item or another it is left to the imagination of the Seller and Listing Agent as to what needs to happen. Of course, this can be clarified by the Buyer directly during the pre-settlement walk-through.  By then, it’s almost too late to do anything so there is lots of running around, perhaps a repair escrow, perhaps an additional credit to the Buyer.  None of it is any good.

So it’s important to get the information needed in a clear and unmistakable way so things happen when they’re supposed to happen and everyone is happy when they sit at the settlement table together.

A good Realtor with experience and knowledge of the Contract of Sale can really help by making things clear and communicating them well to other relevant parties to the process.  If you want to know more about the real estate process, shoot me an e-mail or give me a call.

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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.

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Merry Christmas from the Blog (hey, let’s be real! it’s actually, me, Ken, saying it) and a very joyous Holiday Season!

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2008 has been a tough year on all of us - home buyers, home sellers and all the real estate professionals involved in the sale of residential real estate: Realtors, lenders, home inspectors, appraisers, title companies, home improvement contractors and the many people - real human beings - that work at all these places.  It would be real nice if you could arrange for a 2009 that’s a little easier on everyone.

The List

• Equilibrium - this is where there are about the same number of houses for sale as there are home buyers who want to purchase a house.  This works well for everyone.  Home buyers still have a great choice of homes without having to get into bidding wars, they can still do inspections and get repairs completed and prices will be reasonable.  Home sellers won’t have to worry about waiting a year while their house sits on the market and, most importantly, the house will sell so they can move onto the next chapter in their lives.
• Low Mortgage Interest Rates - this will help people who want to buy homes and it will help people who own homes. Low mortgage interest rates will help keep monthly payments reasonable and affordable for new home buyers.  They will also help all those folks who bought a house years ago with those fancy Adjustable Rate Mortgages (ARMs). If rates stay low, their rate won’t go up (it may even go down) and they’ll be able to stay in their home and help with that equilibrium thing.
• Credit Standards That Work - No, Santa, I don’t want to go back to the day when anyone who could fog a mirror could get a mortgage.  That was way too liberal.  It would be nice, though, if requirements needed to get a mortgage were a little bit more relaxed. Right now, it’s almost impossible for self-employed people or even the affluent to get mortgages because of all the documentation requirements.  There are lots of people that may have credit scores in the high 600s that will probably pay the loan back like clockwork.  Appraisers need some leeway to consider the glut of foreclosures and short sales that are artificially depressing the market.  Santa, let’s just lighten up a little bit.
• Civility - I know that this is the tough one, Santa. It’s sort of on the order of “world peace”.  Home sellers want the absolute most they can get and home buyers want to pay the absolute least they can pay.  That’s OK.  But do we have to be so mean about it?  If home buyers get a good price do they also need to nit pick every crack and tear in the house?  Do Realtors have to scream or make threats about “walking away” in order to transfer real estate from seller to buyer? It’s alright with me that people stand firm on what’s important to them.  We should be able to negotiate in good faith and with an even temper so that everyone comes out feeling good about the process and the end result.

So, there you have it, Santa.  It’s not a long list.  You don’t even have to deliver it all on Christmas Day. Sprinkle it on throughout the year.  Keep it in mind, though, Santa. Pretty please.

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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.

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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.

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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.

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