Friday, February 22, 2008

Getting the Most Bang for Your Buck in Resale

I received a great question today from a property owner who is considering selling his home in about 3 years.  His home is about 40 years old and he was considering installing vinyl siding or painting the current shingles on the house and wanted to know what the return on the investment would be.  Although vinyl siding does help with energy efficiency, the main reason to install it would be for personal preference. 

Based on my past experience, I have noticed that siding tends to return about 50% of its cost to install.  Although having a more maintenance free home is appealing, if you anticipate paying $18,000 to install siding, you can expect the return when you sell to be somewhere around $9,000 +/-.  It is important to keep in mind that siding offers a color choice that another Buyer may not like and they may look at it as a deterrent as well.  Although that can be said with just about anything inside a home, there are other places that you will see a better return on investment when you sell.

Some of those areas are: new windows, kitchens, bathrooms, HVAC.  If you are thinking about improving your home and you are not sure how it may impact your property value down the road, just ask and I will be happy to let you know what I have seen in my experience.   

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Monday, February 18, 2008

The Maryland State Benefit to Being a 1st Time Home Buyer

If you are getting ready to purchase your first home in Maryland and were wondering what that means to you, this is it.  You do not have to be a first time buyer in general, just in the state of Maryland to qualify.  Although Maryland has some of the highest closing costs in the United States they do vary from County to County.  This is because the Counties establish their own fees for the transfer taxes as well as the recordation stamps.  You may wonder why they are different.  The recordation stamps are charged (there are a few exceptions) whenever a new mortgage is recorded.  However the transfer taxes are charged when the property changes hands (as well as the recordation stamps).
Getting back the benefit of being a Maryland 1st Time Buyer.  Although the counties vary what they
charge for transfer taxes, the state fee is always a total of .50% of the sales price (this fee is usually spilt 50 / 50 between Buyers and Sellers).  Therefore when a first time buyer purchases a home for $300,000 the total state transfer tax is $1,500.  The Buyers’ portion will be waived by the state.  Therefore the Buyer saves $750 in this example.  The Seller does not have to pay any additional, the state simply does not charge to Buyer. 
 Welcome to your first home in Maryland.  Maryland will be happy to give you a break when you buy, however the state will also be happy to charge you when you sell later J
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Friday, February 15, 2008

Our area MLS (MRIS) Changes Rules in Reference to Days on the Market

Both Sellers and Buyers alike ask me all of the time how long a home has to be off the market before the days on the market in the MLS system resets back to 0.  This question was asked very rarely when the houses were selling very quickly.  However as the average days on the market has increased and many Sellers have realized that their friend who just got their license or the limited service brokerage cannot get the job done there have been more times than not, that Sellers switch agents or brokerages to other companies.  Up until recently a home had to be off the market for 6 months before the days would reset back to 0.  However the rules have changed as of today.  Here are the new rules. 

Here are the new rules:

DOMP Changes Set to Take Effect February 15, 2008
Effective Friday, February 15, MRIS will change the way that it calculates Days On Market Property (DOMP).  Currently, DOMP will not reset to zero until a property has been off the market for a total of 180 consecutive days.  Effective February 15, DOMP will reset to zero when a property has been off the market for 90 days.
Why did MRIS change this policy?
MRIS periodically reviews all of its policies.  MRIS is led by a Board of Directors comprised of experienced brokers serving our region.  The expertise of the Board is further bolstered by at the MRIS Compliance Committee as well as feedback from our customers via subscriber surveys.
In 1993, MRIS selected 180 days (a half year) as the inactivity period.  It was an arbitrary number selected to represent what was then considered a complete market cycle.
Over the past few years, the entire flavor of the real estate market has changed dramatically.  Consumers buy and sell with much more frequency, the economy has been extremely volatile and 90 days, or one quarter, seems to more appropriately represent a complete market cycle.  Industry statistical reports are generated quarterly, economists form their judgments and predictions based on quarters, etc.  And 90 days is more consumer-friendly; it allows a reasonable amount of time for a homeowner to repair or refresh a property and/or redesign a marketing plan.

 

Posted by Scott Smolen at 16:50:16 | Permalink | Comments (4)

Thursday, February 14, 2008

President Bush Signs Economic Stimulus Bill

President Bush signs H.R. 5140, the Economic Stimulus Act of 2008, which is intended to give a temporary boost to both conforming and FHA loan limits. The new law boosts the conforming limit to as much as $729,750 through the end of this year, and also raises FHA lending limits to the same level for high-cost areas. Early word is our area will stop around $630,000
 The U.S. Department of Housing and Urban Development now has 30 days to publish a database of house prices that will be essential in determining which markets get access to the new ‘jumbo conforming’ or ‘expanded FHA’ loan products.  Once I know exactly what the limits are, I will let you know.  You can expect that the limits may vary in different counties.  However I do believe that this bill will really give the housing market a shot in the arm and continue to boost the market.
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Tuesday, February 12, 2008

Just Another Crazy Monday

The market is continuing to improve all of the time.  I actually received two offers for the same house today.  This is a first in a long time.  However I think it is a sign of things to continue.  Hopefully we are not heading down the path of bidding wars on a regular basis anytime soon.  However I get the feeling that more Buyers who snooze will begin to lose. 

I believe that anybody buying a home should take their time and make a well calculated decision.  However if you are considering buying and are waiting for the Seller to make a price drop, somebody else may make your decision for you.  Whenever you are looking at homes make it a point to only consider the top 3 on your list.  Once a home falls out of the top 3, don’t think about it anymore.  However if you have a house at #1, for a while and you keep going back to that house there may be a reason.  I would always prefer to have a Buyer take a shot at getting a house and being told no (I prefer they are told yes :-), however that way they know if was meant to be or not.  I think it is becoming more important by the day to consider the house you want today may be gone tomorrow.  It is not a pressure cooker situation again (yet), but all signs are pointing to a busy, busy spring market.

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Sunday, February 10, 2008

The Market is Heating Up Everyday

Although you never know when the market has peaked or bottomed out until well after the fact, I am seeing strong signs that the Anne Arundel market is quickly picking up and that Prince George’s should be following suit soon.  Looking back, the Anne Arundel County resale market seemed to peak in September / October of 2005.  However the market in Prince George ’s County (especially Bowie) seemed to plug along throughout the winter into about May / June of 2006.  Since the Prince George’s market kept the torrid pace for about 6-8 months longer than Anne Arundel County, I expect the recovery of that market to trail about the same amount of time.

 

We are not seeing the days of multiple offers and bidding wars at this point.  However nice homes that show well and are priced correctly are beginning to move quicker and quicker.  We are also seeing the nice homes that got caught up in the unexpected fall / winter deep freeze also selling as their prices have adjusted to where buyers are willing to pay. 

 

What does this mean to you as a Seller if you are thinking of selling?  Make sure you consult an area expert prior to listing your home and have it ready to hit the market in perfect show condition.  It is best to price as realistically as possible and be prepared to be negotiable for the right buyer when they come along.  We are seeing an average of about 3% +/- in negations for non-contingent buyers, who have solid financials; much less if any for contingent Buyers.

 

What does it mean if you are buying?  Be realistic in your offer based on recent comparable sales analysis.  It is best to negotiate in good faith and be informed in what you offer.  We are not in the extreme Buyers’ market that some parts of the country are in.  An offer of 10%-15% below asking price in this area will most likely be rejected without further consideration.  If you are looking and believe a home is overpriced by 10%-15% based on the data available to you, it may be best to have your agent ask the Sellers if they would be willing to consider an offer with some basic parameters set forth prior to writing a formal offer.  This way you will know in advance if the Seller is going to be insulted or willing to talk.  If the Seller is not willing to consider what you think the house is worth, you can be patient and wait.  If you are correct and willing to wait, the asking price may drop or the Seller may become more negotiable in time.  However if you are incorrect, you may miss out on the house that you would like since more and more Buyers are looking everyday.

 

I still think it is a great time to buy.  We will not know where the market is going to go until it has been there.  My thought is that as we get closer to the Elections in November the market will steadily pick up.  If you bought during the time of the bidding wars, you probably remember the stress.  It may be nice to own your home now without going through that stress and then let the market appreciate as you live there as opposed to trying to catch the wave.

Happy Buying and Selling.

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Friday, February 8, 2008

Congress Approves Stimulus Package

Late last night the Senate approved and sent to President Bush an extensive economic stimulus package which includes unprecedented changes in FHA and FNMA loan limits.  This bill will allow FHA and FNMA to purchase loans worth as much as $729,750 for loans made between July 31, 2007 and Dec. 31, 2008. 
Details on restrictions, regional limits, and the actual implementation have yet to be resolved.  I would expect that since our area has some of the higher housing prices in the country we should hopefully qualify for some of the highest conforming loan limits.  Although Anne Arundel and Prince George Counties border each other and are essentially both suburbs of both Washington D.C. and Baltimore, they are usually treated as different markets.  There is a chance that will continue and the actual loan limits may vary from county to county.                                                                                                                                                  
 Currently Fannie Mae and Freddie Mac are only able to purchase loans under $417,000 (conforming loan limit).  Loans with balances above that limit are considered Jumbo loans and have fewer investors and are significantly more expensive and difficult to finance.  Even when financial institutions are willing to make these loans, because there is no secondary market for them, they cannot sell the loans and fund new ones.  By permitting the GSEs to buy these loans, this change would provide vital liquidity to mortgage markets where funds are currently unavailable or limited.
  This is without a doubt, one of the biggest events (although only proposed as temporary right now) that our industry could experience and will change the landscape for financing for millions of buyers.  This is also great news for anybody who may be looking to refinance their homes (especially if the loan amount is more than $417,000). 

I expect this package to give the real estate in this area a real shot in the arm as conditions are actually improving steadily already.  I have noticed inventories in certain areas and specific price points are beginning to constrict.  Although there is still a good supply to pick from that may not last too long into the spring market.  If you think this may be your year to buy that 1st home, or you are considering moving up I would suggest beginning the process sooner rather than later as this market will heat up with the weather.

 

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Wednesday, February 6, 2008

Sub Prime Problems - Not Too Bad in this Area

Found out an interesting statistic yesterday that I thought would be important to share.  I was not aware how concentrated the sub-prime mortgage problems are geographically. Based on the information from the National Association of Realtors, 5 states account for 70% of the problems.  Florida, Georgia, California, Nevada, and Michigan account for 70% of the entire sub-prime mortgage problem for the entire country.  This is just one more reason that we are fortunate to live in the Washington D.C. and Baltimore Metropolitan areas.  As the government and banks take corrective action to mitigate these problems in other areas, we will benefit in our area where the problems are no where near as severe.
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Tuesday, February 5, 2008

Tuesday with ReMax’s Founder Dave Liniger

First and foremost, I want to wish a Happy Birthday to my loyal assistant Stacey Singleton (she has been working with me for just under 5 years).  Stacey is enjoying her birthday this morning by taking care of a plethora of calls while I was in a seminar.  The title of the seminar was Be Great in 2008, so in staying with the flavor, I hope Stacey has a Great 2008.

I have been saying for a while now that the real estate business is really starting to pick up in this area.  It is ironic that this morning on Stacey’s birthday we were busier in 3 hours than a normal day as of late.  Although it is impossible to judge where the market is going until it has been there, I truly believe that the market is beginning to pick up in a hurry as we move into Spring.  

Although our seminar today focused a lot on ReMax as a company, there were some really good facts that came out that I do not think too many people know.  One that I believe is very interesting is that despite all of the negative press in the media, 2007 was the 5th BEST year in US real estate ever.  Coming off of 2005 (1st) and 2006 (3rd) it seems to be slower than what anybody would like.  However the market is still strong in our part of the country.  Another interesting fact is that the inventory has ballooned in some states like California, Nevada, Michigan, Florida, and Georgia in part to the excessive home building and also in part to the sub-prime lending that allowed people to buy homes that they simply could not afford.  

The economic stimulus package in Congress should be a great first step into getting this problem resolved.  The main benefit will hopefully be Congress allowing Fannie Mae and Freddie Mac to raise their loan limits for conforming loans (currently $417,000 in this area) to a proposed $729,000.  This will allow people who are in exotic financing a way out so it will naturally stop many of the pending foreclosures as ARM’s reset their interest rates.  It is true that many areas in the country are facing a tough employment market and jobs are harder to find.  However in this area, we should just continue rolling along and the stimulus needed in other parts of the country, may very well get our market to heat up to levels seen in 2004 and 2005 in no time.  

As long as you look at real estate for the long term investment vehicle that it is, now is a great time to buy while interest rates are low and there are plenty of homes to look at.  Despite what some might think, waiting for a house to pop on the market and then running immediately to see it that day is not fun for Buyers or Realtors.  A balanced market of about 4-6 months of inventory is truly ideal.

 

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Monday, February 4, 2008

Giants Shock the World

More people call out sick or miss work the day after the Super Bowl than any other day of the year.  That being said things seem to be getting a late start here on Monday.  Although my score prediction was way off for the game, it is time to get football season behind us all as the market begins to pick up from its winter slumber. 

Before we do too much work today, my favorite commercials from the game had to be in no particular order: T-Mobile with Charles Barkley and Dwayne Wade, Under Armour shoes, the baby with the Etrade commercials, and the Budwesier “Rocky” commercial with Hank.  I have always found it intriguing that the best commercials today say so little about the product that they are selling.  They are created in order to spur emotion. 

What do the commercials have to do with real estate?  Most Buyers when looking at any home are motivated to buy due to emotion well before logic.  This is why curb appeal is so important when selling a home.  During the winter months, it is nearly impossible to have excellent curb appeal.  While that will all change as the weather warms up (pansies are a great flower to add early spring color), it is important to keep the exterior of your home as clean and fresh as possible even when the weather creates a barren environment.  In the event we get any snow, it is always nice to have a very clean walk way leading to the house.  This way the Buyers (and agents) can observe the exterior of the home as opposed to making sure that they have to concentrate on the sidewalk.  In addition to a clean, fresh appearance, it is also a good idea to leave any and all exterior lights on during evening and night showings.  I always advise Buyers that they can rule out homes with after dark appointments, but it is essential to see a house in full daylight before you can rule it in.

Got to run, I have a busy day from now until late tonight but Congratulations to the Giants.  Maybe my Redskins will have their new head coach directly from the Giants staff.  We will see.

 

Posted by Scott Smolen at 15:37:00 | Permalink | No Comments »