What Every REALTOR® Wants You To Know About Open Houses


Open houses are one of the many tools that real estate agents have at their disposal to sell a property.  But to be honest, the chances of selling a house during an open house run between 7-10%.  Not great odds, but not anything to disregard, either.

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My approach is to discuss what is required of the sellers’ to have an open house and let them decide.  As a REALTOR®, I will do whatever the client wants.  To be honest, I like open houses, but I am also realistic that it probably will not bring in a buyer.  I do like the chance to meet people who are coming in and could possibly be looking for a house – hence, a new client.

There are many factors that the sellers’ need to be aware of in deciding to have open houses.  The first issue is that the house needs to be pristine and the sellers need to go someplace for a few hours.  Also, I always advise clients to be sure to safeguard valuables including jewelry, medication, weapons, and pets
.  In my experience, I have never had anything stolen during an open house, but I do appreciate that it is a risk.

Having mud tracked into the house during an open house is also a real possibility.

That being said, I do think it is a realistic approach to exposing potential buyers’ with your home.  Open times buyers will scout out areas that they are interested in and will check out open houses.  There is some advice that I have for buyers, especially if they are attending open houses.

First and foremost, if you are even thinking of buying a house, sign on with a REALTOR® who will be your advocate in the entire transaction.  I have covered this issue many times, but it really bears repeating.  Once you sign with a REALTOR® that agent will be able to advise you on things that are in your best interest, not the sellers.  All to often, buyers will drive through an area and decide to stop at an open house.  They walk in and look around and meet the agent on duty.  What that agent should say is something to the effect of, “Hi, my name is Ricky REALTOR® and I’m here representing the sellers.”

Now that may sound like he is stating the obvious, but in reality he or she has just legally informed you of who they work for.  That means that any information you divulge, however innocently, will go back to the sellers.

Don’t get me wrong, that agent can and will complete the contract for you if you do not have agent, but its better to have you own agent.

As a buyer, if you decide to go to an open house without your agent – and that is perfectly OK – you should immediately tell the agent holding the open house that you are already working with an agent and give their name.  If you decide that you want to find out more information or you want to submit an offer, contact your agent immediately and have them do the contract.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland Low

What Every REALTOR® Wants You to Know – How to Avoid PMI Insurance


There is great news in the real estate market today regarding the ever-hated PMI Insurance.  Mortgage companies are looking for ways to ways to bring more home buyers into the market.  The 20% down payment required by conventional loans has kept a lot of buyers out of the market.  The other part of a mortgage that has continued to be problematic is the PMI Insurance that is generally required of mortgages that do not have the 20% down.

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There are many programs out there that will enable buyers to circumvent the 20% down.  Programs as low as 3.5% downpayment are widespread, but until the other day, the PMI Insurance continued to be a problem for homebuyers.

This week Bank of America announced a new mortgage program called the Affordable Loan Solution.  This mortgage requires as little as 3% downpayment and is not an FHA loan.  Bank of America’s program is a partnership with Self-Help Ventures and Freddie Mac.  Because the Bank of America program is taking the first-loss position of the lien it does not require the PMI Insurance.

To give you some idea how this program will affect home buyers:  Let’s assume that you want to buy a home for $350,000 at 4.0% mortgage interest with the minimum downpayment – meaning that you do not pay the 20% down.  Your payments would be as follows.  PLEASE NOTE: These numbers are for comparison only and are rounded off. 

Monthly Payments                        BofA’s Affordable Loan Solution                         FHA Loan

Principle & Interest                       $1,621                                                                        $1,612

Property Taxes                               $365                                                                           $365

Homeowners Insurance              $102                                                                           $102

PMI Insurance                              $-0-                                                                            $290

Est. Monthly Payment          $2,088                                                                  $2,369

This would amount to a savings each month of approximately $281 per month for homeowners.

The program does require a FICO score of 660 at this time.  Therefore, if you are thinking of buying I strongly encourage you to start the process early to ensure you have the score you need to qualify for this program.

If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

 

What Every REALTOR® Wants You To Know – About Commissions


In order for the real estate market to work, there has to be sellers and buyers. It is the role of the REALTOR® to bring those two clients together. Anyone who has ever bought or sold a house will confirm that the world of real estate is a complicated and convoluted transaction.

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The role of the REALTOR® is to bring those clients together and work through all the details to make it happen. Whether you are a buyer or seller you should have a REALTOR® who will look out for your best interests. By doing so the REALTOR® earns their commission.

In the vast majority of transactions the seller will provide the commission fee. And although that money may seem like a large amount it really breaks down to a lot less than people realize.

In todays market the listing commission runs between 6% – 7%. Although I will mention that those fees are always negotiable, although most brokers will require agents to maintain a 6% – 7% range.

For the person of this article, lets assume that the seller is listing their house for $250,000 and signs a listing contract with a commission of 6%. The commission that would be paid by the seller at the closing if and when their house sells would be $15,000.

That may sound like a lot of money, and it is, but that fee does not go directly to the listing agent. It is split between the two brokers involved, the listing broker and the buying broker. For the sake of this article, lets assume that the brokers have agreed to split 50%/50%. At closing then $7,500 would go to each broker.

That fee of $7,500 would then be split between the broker and the real estate agent who actually handled the transaction. For simplicity, lets assume that the split is again 50%/50% although that percentage is very variable between agents and brokers. The amount that is now credited to the agent who handled the transaction is now $3,750.

The brokers fee is used to cover office space, telephones, television advertising, computer software, etc.

The agents fee which is now about $3,750 has to cover costs that many small businesses have to cover; such as a photographer to take pictures of the house (if the listing agent), signs, flyers, advertising, insurance, membership to the REALTOR® association, fees for the MLS, buy Sentrilocks for your front door, etc. You also have to remember that as an independent contractor, which is what most agents are, they also need to pay taxes on that amount. That amount is now down to about $2,500 for the sale of the house.

For that amount the seller’s REALTOR® will:

• Prepare a comprehensive market analysis
• Visits you, walks through the home, makes recommendations, answers your questions and fills out the listing contract
• Lists the home on the MLS
• Meets the professional photographer at your home and hangs out while that person takes photos and video
• Markets your home on various websites and print ads, and installs signage
• Holds an average of 2 Open House events
• Takes calls from prospective buyers and buyer’s agents and makes showing appointments
• Communicates with buyers or their agent regarding an offer
• Presents that offer to you, makes recommendations and prepares a counter offer
• Finalizes a contract with you and files it with the broker
• Meets the property inspector, appraiser, and sometimes handymen and waits around while they do their jobs so that your contract fulfills
• Communicates with the buyer’s agent regarding contingencies in the contract
• Presents you with additional addendums to the contract, as needed, sometimes preparing counters to those addendums
• Communicates with the escrow officer to make sure that the payoff on your mortgage is in order and that all paperwork is ready
• Attends closing with you
Nevertheless, most REALTORS® love what they do and work extremely hard to bring sellers and buyers together.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

Five Ways for Buyers’ to Kill a Real Estate Deal


Anyone who has ever bought real estate will attest that buying real estate is a process and not a quick process either. Often times buyer’s feel that it is a waiting game from the time of contract acceptance to the closing, but in reality there are many, many things that are going on behind the scenes that will get them to the closing table.

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During this emotionally charged time for buyers’ often times they will make decisions that can adversely affect the outcome of buying a home. It is critically important that buyers’ maintain a steady financial posture during this time. Any expenses out of the normal day to day living should be discussed with your mortgage officer or REALTOR®.

Here are five areas that can be damaging to a real estate transaction:

1. Buying on credit. Often times home buyers are excited about moving into their new home and want nothing more than having all new furniture or even some new furniture. This is a problem that surfaces on a lot of transactions and buyers should avoid like the plague. Any additional debt will affect your debt to income ratio and could prevent you from getting a loan. Even if you apply for new credit, the simply inquiry that the creditor will do on your credit bureau may lower your credit score and again affect your ability to buy. The rule of thumb – don’t take on any new debt without first talking to your mortgage officer.

2. Missing a payment. Buying a home is an exciting time but it can cause a lot of stress for buyers. Additional stress can lead to missing payments on an account that you would otherwise be meticulous about paying. Many lenders may require a certain period of no-late payments to qualify for the mortgage, such as 12 months. One late payment may preclude you from qualifying or result in a larger interest rate that will be with you for a long time.

3. Be Careful with withdrawals AND Deposits. During the loan process, underwriters will be scouring your accounts for withdrawals and deposits. Withdrawals will reduce the funds you have available and may concern the underwriters. Unexplained deposits will be red flags as to where the funds are coming from. These funds will be examined throughout the process and will be reviewed again right before closing to ensure everything is still intact.

4. Co-signing a loan. You may have a friend or family member who is the most responsible person around but co-signing for a loan while you are in the process of closing on a house may be the kiss of death for your loan. Even though you may not be directly responsible for the co-signed loan, if they default, you are now on the hook for the payments. Because of that underwriters will factor those payments into your debt ratio and it may knock you out of the mortgage.

5. Changes in employment. Next to taking on additional debt during the loan process, changing employment is the second problem for home buyers. Even if the change in jobs brings more money, lenders will look at it as a risk. Often time new employees work for a few months on a trial basis and may ultimately lose the job they thought was a step up. Lenders want to see a stable, reliable income that is likely to continue in the foreseeable future.

The secret to getting to the closing table is to communicate with your REALTOR® and mortgage officer during the process and take their advice.

If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

Real Estate Market Conditions – January 2016


There is little doubt that the rebound of the real estate market has been a slow but steady improvement.  The latest numbers to come out for the State of Maryland and more specifically, Frederick County confirms the continued improvement of the market.

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The State of Maryland had a 14.2% increase in the sale of homes in January, 2015 compared to January, 2016.  That results in 553 more homes sold in Maryland in January of this year compared to last January.

Frederick County had a 22.0% increase over last year January. The average price of homes decreased by 0.5% over last year January.

The inventory of homes on the market is an extremely important number that real estate professionals watch closely.  The rule of thumb is:

If there is 6 months or more of inventory of homes for sale, it is considered a buyer’s market.

Any where from 3 months to 6 months of inventory is considered a neutral market – neither a buyer’s market or a seller’s market.

If there less than 3 months of inventory of homes for sale, it is considered a seller’s market.

In the State of Maryland, the inventory level for January, 2015 compared to January, 2016 dropped from 6.5 months to 5.5 months meaning it has transitioned from a buyer’s market to a neutral market.  

In Frederick County, the inventory level for January, 2015 compared to January, 2016 dropped from 6.3 months to 5.5 months meaning it too has transitioned from a buyer’s market to a neutral market.

A continued downward trend to 3 months or less of inventory will switch to a seller’s market.

If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

 

 

6 Steps to Help First-Time Home Buyers


6 Steps to Help First-Time Home Buyers

Statistics show that there is a huge pent up demand for homes from first-time homebuyers.  Many first-time home buyers have remained on the sidelines for the last several years for many reasons; the economy, saving for the downpayment; reducing debt, etc.  But as these homebuyers come into the market, there are several steps to help with the purchase of their first home.

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  1. Do not delay contacting a REALTOR®.  All too often first time home buyers who are renting will wait until their lease is about to expire and then try to buy a home without realizing how long it takes for the process.  Then if the buyers can not find a home to close on in a short period of time, they wind up renewing their lease or trying to find some kindhearted friends or relatives that they can stay with for a while resulting in a double move.  My advice is to contact a REALTOR® as far in advance as possible to begin the process.  Six months to a year is not unreasonable.  This provides the added benefit that if there is a blemish on your credit report it gives you time to deal with that issue rather than at the last minute.
  2. Borrowing the maximum amount a lender will allow and not creating a realistic budget.  Mortgage companies are in the business of making money.  Its no surprise that they do this by loaning money – the more they lend, the more the make.  Nevertheless, it’s important that home buyers determine what fits into their budget and stick to it.  In reality, the mortgage market is very good and predicting what mortgage amount will be realistic for home buyers, however, if you like to travel or spend money on other things, be sure you evaluate that into your mortgage amount.  Its also important to have a firm understanding of what expenses you will occur with your new home.  Heating a 2,200 square foot home is very different than an apartment.
  3. Looking ahead. Most first-time home buyers stay in their homes approximately four years.  It’s important to have some idea of how long you plan to stay in the house and to evaluate the resale value.  If your buying a townhouse in a large development that is just starting, and the new construction will be going on for a few years, it may be difficult to sell your property when construction is going on.  If your thinking of staying several years and starting a family, the school district may be a major issue for you.  If you get to the point that you think you may want to sell your home, be sure to talk to a REALTOR® about the price that it may sell for.  There are on-line companies that will indicate what your home will sell for with little or no regard what your home is actually worth.   Often times these prices are tens or hundreds of thousands of dollars off.
  4. Shopping for a House is different that buying a house. This goes as well for seasoned home buyers as well as first-time home buyers.  When the time comes to put in an offer and buy a house, time is of the essence!!  There is a fine line between moving quickly and moving too quickly, but I always tell my clients that when you decide to put in a offer call me – do not rely on email.  There is nothing wrong with “sleeping on it”, but the saying in real estate is “The house you looked at today and want to think about until tomorrow, may be the house someone looked at yesterday and wants to think about until today!”
  5. Pre-approval for a mortgage.  This is one topic that can not be overstated.  When meeting with a REALTOR® one of the first conversations they should have with you is whether or not you have been pre-approved for a mortgage.  There are several reasons for this.  The most important is to find out what price range you are realistically able to buy.  All to often, buyers have the mistaken idea that they want to buy a home around $700,000 when in reality they can only get a mortgage for $500,000.  If they have already been looking at homes in the range of $700,000 everything that I show them at $500,000 will most likely be disappointing.  The second reason for talking to a mortgage broker early on is that if there are issues with your credit score it may be things that can be corrected, but that usually takes time.  If you wait until the last minute to apply for a mortgage, you may not be able to close on time.  The third thing that I will mention is when you put in an offer it is always, always, always a better situation to include a letter from your lender stating that you have been pre-approved for the purchase price rather than indicating to the seller that now you will try to get a loan.  The last item I will mention regarding the mortgage is that it is very complicated regarding the amount of cash you have and the debt you have.  Whether or not you should hang on to the cash or pay down some debt is a call that is best made by the mortgage office.  They can be a big plus in this area.  
  6. If you want to impress a seller, strike while the iron is hot.  One thing that I advise clients is that when you want to buy a house, be prepared to make quick decisions.  If the sellers counter your offer, which is usually what happens, make a quick response as to the offer.  Waiting the full amount of time before the offer expires indicates to the sellers that you really aren’t too interested in the house.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision,

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

9 Easy Mistakes Homeowners Make on Their Taxes


With tax time once again upon us, I thought it would be good to share some common mistakes that homeowners make on their taxes.

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#1: Deducting the wrong year for property taxes.
You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind — that is, you’re not billed for 2013 property taxes until 2014. Enter on your federal forms whatever amount you actually paid in that tax year, no matter what the date is on your tax bill.

#2: Confusing escrow amount for actual taxes paid
If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.

For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200 or the amount of property taxes noted on the Form 1098 that your lender sends. If you don’t receive Form 1098, contact the agency that collects property tax to find out how much you paid.

#3: Deducting points paid to refinance
Deduct points you paid your lender to secure your mortgage in full for the year you bought your home. However, when you refinance, you must deduct points over the life of your new loan.
For example, if you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $2,000 divided by 15 years, or $133 per year.

#4: Misjudging the home office tax deduction
The deduction is complicated, often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return.
But there’s good news. There’s a new simplified home office deduction option if you don’t want to claim actual costs. If you’re eligible, you can deduct $5 per square foot up to 300 feet of office space, or up to $1,500 per year.

#5: Failing to repay the first-time homebuyer tax credit
If you used the original homebuyer tax credit in 2008, you must repay 1/15th of the credit over 15 years.
If you used the tax credit in 2009 or 2010 and then within 36 months you sold your house or stopped using it as your primary residence, you also have to pay back the credit.
The IRS has a tool you can use to help figure out what you owe.

#6: Failing to track home-related expenses
If the IRS comes a-knockin’, don’t be scrambling to compile your records. File or scan and store home office and home improvement expense receipts and other home-related documents as you go.
#7: Forgetting to keep track of capital gains
If you sold your main home last year, don’t forget to pay capital gains taxes on any profit. You can typically exclude $250,000 of any profits from taxes (or $500,000 if you’re married filing jointly).
So if your cost basis for your home is $100,000 (what you paid for it plus any improvements) and you sold it for $400,000, your capital gains are $300,000. If you’re single, you owe taxes on $50,000 of gains.
However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523. And high-income earners could get hit with an additional tax.

#8: Filing incorrectly for energy tax credits
If you made any eligible improvements in 2015 and 2016, such as installing energy-efficient heating and cooling system, you may be able to take a 10% tax credit, up to of $500. With some systems your cap is lower than $500. For instance, you can only claim $200 on windows. But keep in mind, this is a lifetime credit. If you claimed the credit in any recent years, you’re done.
Installing a solar electric, solar water heater, geothermal, or small wind energy system can also make you eligible to take the Residential Energy Efficient Property Credit.

To claim the deduction, you have to use the complicated Form 5695, which can mean cross-checking with half a dozen other IRS forms. Read the instructions carefully.

#9: Claiming too much for the mortgage interest tax deduction
Taxpayers are allowed to deduct mortgage interest on home acquisition debt up to $1 million, plus they can also deduct up to $100,000 in home equity debt.
This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

If you are thinking of buying or selling a home, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

This information has been provided by the National Association of REALTORS® for use by REALTORS®. This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.