Real Estate Information

Like many other industries, real estate has become a war-zone of heavy competition. Agents find themselves contending with each other for an ever decreasing “piece of the pie”, while banks, insurance companies and relocation companies are also vying for their share of local markets.

 

Common catch-phrases become the ammunition used by many brokers to set themselves apart from their competitors. One such phrase is “full service”.  This term was once used to differentiate the “one-stop-shop” brokerage, from the brokerage who relied on the four “P’s”; Pitch a sign in the yard, Put it in the MLS, Place and ad in the paper, and Pray that it sells. But because it has been overused by companies who don’t provide services, it has lost its meaning.

 

It is no secret that today’s consumers want to be well represented, and they want the service that goes along with that representation. The challenge for many hardworking agents is showing how true-full-service helps the seller obtain a larger bottom line from the sale of their home.

 

A comprehensive marketing plan that is consumer driven, and not ego driven is the foundation of services a home seller should expect. And the agent should be able to show how their plan will increase the sellers bottom line. Does the agent have an interactive website? Can their web site be easily found in the Internet search engines? Are they able to capture potential buyer-leads? How? Will the agent provide brochures? Virtual tours? On-line photo albums? Does the agent advertise in a variety of homes publications? How far reaching is their advertising?  What other services does the agent have that might save time and money?

 

When all is said and done, there is a simple formula that will show the home seller that a brokerage providing a broad variety of services leads to a higher bottom line.  An agent should always know their “list price to sell price” ratio. This figure is the average of all of their listings selling price divided by the initial list price.  The higher the average the more likely the home seller will receive a larger bottom line; perhaps the single best service a “true full-service” brokerage can offer a home seller.

 

For a free home valuation, and to discuss your custom marketing plan provided by DeHanas Real Estate Services, call 301-638-3443 or 301-870-1717.

 

As a real estate professional, I have found that educating the public is a large part of my business. You may remember the catch-phrase used by The Men’s Warehouse clothing company; “Our best customer is an educated customer.” No truer words have been spoken when it comes to selling residential real estate. When I work with a buyer or seller who is aware of the market conditions, and understands the value of ‘doing things right from the beginning’, there tends to be a much smoother, and gratifying experience for all involved.

 

So why is it that some homes sit on the market and never sell (and current statistics indicate that 41% of the homes on the market in Southern Maryland will not sell), while others sell in a relatively short period of time? Two reasons; “sellability” and “Pricing”. When you make improvements to a home, like replacing the carpeting, freshening up the paint and sprucing up the landscaping, you are adding to the sellability, not to be confused with “Value”. The aforementioned improvements do not create value. The second reason is “price”, and the biggest reason homes do not sell.

 

There is a common misconception about the difference between a Comparative Market Analysis, commonly known as a CMA, usually prepared by a licensed real estate agent, and an appraisal, which must be compiled by a licensed appraiser. Unfortunately, sellers will often times confuse market value with market price, which prompts unrealistic expectations of what their home will sell for.

 

Keeping in mind that ‘a home is worth only what a buyer is willing to pay for it’, it stands to reason that when supply outweighs demand there is more to chose from, putting pressure on pricing, and thus creating a buyers market. Maryland real estate cannot be lumped, as a whole, into one category.  There are parts of it that are experiencing significant price pressure, while other areas, like Southern Maryland are seeing flat to only slightly negative appreciation.

 

The secret to pricing a home that will sell (here is the real tell-all) is to price it 2%-5% in front of the market comparisons in the direction of the trend.  In an up trending market, you would price a home higher than the last home sold for, while in a down trending market, a home should be priced slightly lower that the last group of comparisons sold for.  In Charles County, for example, recent home-sale statistics show the average ‘sold’ price was –1.44% over homes sold a year ago. If you want to sell your home under the current conditions, you would price it about 2% below the CMA recommended price for your property.

 

Often I will hear a seller say that “it appraised for more”…….And here is the reason for confusion; there are a number of reasons a seller will get an appraisal. It could be for a home equity line, a refi, a bridge loan, or an appraisal of resale. Each of these appraisals is compiled for different reasons, and is merely supporting documentation that is required by the bank to justify the loan they have made to the homeowner. It is not uncommon at all for three different appraisals to have three different values. Also, the typical comparison appraisal only uses 3 comparables, while a CMA generated by a real estate agent uses all of the comparables within the neighborhood, providing a larger picture of the market trend. Also, the information in a CMA and an appraisal is only good for 90 days. Don’t rely on the pricing opinion you received 6 months earlier, as it will have changed.

 

I would love to hear your feedback on this posting. Did you learn something new? Has it helped your thought process on the subject?  It would be my pleasure to provide you with a free CMA on your home.  Please e-mail me at don@dehanas.com

 

Now here’s some news we can really get excited about!  Did you know every time a home is sold it generates an average of $63,000 of cash flow into the economy within the first year. It includes money spent on home décor, landscaping and lawn care, mortgage, title and real estate companies. So, why don’t we do for the real estate industry what has recently been proven successful to the auto industry.

There is a new $900 billion stimulus plan working in Congress.  One amendment, which is now a part of the proposed stimulus plan, includes a $15,000 tax credit for purchasing a home.  Georgia Senator, Johnny Isakson, is the main sponsor of this bill.

Specifically, Isakson’s amendment to the pending economic stimulus bill would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislations enactment, and the tax credit would not have to be repaid.

The amendment would allow taxpayers to claim the credit on their 2008 income tax return. It also seeks to prevent misuse by only allowing purchases of a principal residence and by recapturing the credit if the home is sold within two years of purchase.

Another provision in this bill addresses the current tax credit now in place for first time home purchasers. The bill will forgive repayment of the current tax credit.

Although nothing has been passed officially into law yet, here are a few of the key items of interest related to real estate in the stimulus bill:

• The $15,000 tax credit can be taken over one year or spread over two years.
• The $15,000 tax credit doesn’t have to be repaid.
• The $15,000 tax credit will apply for anyone who buys a home - not just first time home buyers.
• The $15,000 tax credit is a credit - not a deduction: meaning you will get the full $15,000.
• The $15,000 tax credit is the lesser of $15,000 or 10% of the purchase price of the home.
• The $15,000 tax credit will be allowed for homes that are bought within one year of if and when the bill is passed.

I am highly encouraging everyone I know to pick up the phone and call their Senator or Congressman.  It is very easy to get contact information. Go to www.Congress.org and enter your home’s zip code.  Then CALL your Senators and Congressmen and tell then you want them to support the proposed $15,000 tax credit for all home purchasers.

The real estate market outlook, based on results for the month of June 2009, appears to be transitioning to more of an even market. This is because of the shrinking inventory, and days-on-the-market which are reduced compared to last month as well as this time last year.  While much of the month of June has mirrored May statistics, there were some trends that show a strengthening.  There were 121 homes sold in Charles County during the month of June compared to only 109 homes sold this time last year. There is currently an overall inventory supply of 10.5 months based on the current level of active homes for sale, which is up slightly from last month.

Home prices continued to fall, as we find the average sold price down nearly 17%. In addition, there has been a very strong demand for lower priced homes, as indicated by the median price, which fell from $299,950 in 2008 to $265,000 this year.   Many buyers are attracted towards price points of bank-owned properties and short sales.  There are some very attractive purchases, but they come with risks. In the State of Maryland, property owners must provide the buyer with full disclosure of property defects. Banks are exempt from having to provide disclosure.

While the bank-owned departments seem to have adequate staffing to support the high level of sales activity, the short sale departments are failing miserably.  I have learned that many agents across the country have had difficulty in the responsiveness of bank short sale departments. Many agents, including myself, have written letters to Congressmen with specific issues regarding the lack of responsiveness from the banking institutions.  My letter to Congressman Steny Hoyer resulted in an immediate response from Chase Mortgage, and a resolution to the transaction. The letter campaigns from Realtors and home sellers from all across the Nation have resulted in getting the attention of Congress.  I would ask any homeowner who is experiencing difficulty in reaching a solution with their mortgage company to contact their representative immediately.  In any event, until responsiveness changes within the short sale department of mortgage companies, home buyers who are submitting offers are being held up for up to nine months before receiving a stamp of approval on the submitted offer.

As for properties in foreclosure, Realtytrac.com reported 105 new properties in default for the month of June in Charles County. The bad news in all of this is that because of the  low number of available buyers, the total number of properties in Charles County that are in some state of foreclosure (including bank-owned) has risen to 887 properties, compared to just 849 during the month of May.  The number of properties in a state of foreclosure continues to rise, and all these numbers are not reflected in the MRIS Trends Report because the majority of these homes are not currently being actively sold at this time.

A word for the buyers:  Interest rates have been inching up over the past several months.  List to sell ratios are up from last month and now sit at 92.10%.With the list to sell ratios increasing it means that buyers are paying closer to the list price than they have been in previous months.  We should see this trend continue.  Banks have also been tightening up on their negotiations, not dropping prices as quickly as they once had.  While the number of defaults are still up, the banking industry is gaining strength. This is a signal to buyers, if you have been waiting for the bottom to hit, now is the time to buy.

The real estate market outlook based on results for the month of May, 2009 comes with some renewed optimism, as we begin to see a trend of “units sold” over last year, reach a rate of 12.26% higher. There were 119 homes sold in Charles County during the month of May compared to only 106 homes sold this time last year. There is currently an overall inventory supply of 10.4 months based on the current level of active homes for sale. Be careful not to rely on this inventory statistic as it has a “false bottom” of sorts.  There is an increasing amount of bank-owned property that is not currently on the market, and as a result, not reflected in the MRIS Trends Report.

The pick-up in home sales, as discussed in the previous paragraph, is likely due to a continued decrease in home prices. The year over year average sold price is down 11.3% in May, and the average list to sell ratio has dropped to 90.94%, meaning that a home listed for $400,000 sold for $361,600 based on the statistics in the May Trend Report distributed by the Metropolitan Regional Information System.

As for properties in foreclosure, Realtytrac.com reported 118 new properties in default for the month of May in Charles County, which shows a downward trend based on the 246 we saw during the month of April.  As of June 15, 2009 Realtytrac.com reported 58 new defaults in Charles County.  The bad news in all of this is that because of the  low number of available buyers, the total number of properties in Charles County that are in some state of foreclosure (including bank-owned) has risen to 849 properties, compared to just 777 during the month of April.  Again, not all these numbers are reflected in the MRIS Trends Report because the majority of these homes are not currently being actively sold at this time.

Back in March, I reported to you that the $5.1 Million dollars allocated to Charles and St Mary’s Counties would soon be disbursed to assist the ailing housing market on a local level.  The commissioners have still not released these funds.  I urge all home owners to contact their County Commissioner and urge them to approve a plan that will aid us in the recovery of our housing market.

You may have also heard that HUD was in the process of approving the $8,000 tax credit to be used as down payment assistance.  In a recent letter, The Secretary of HUD, Shaun Donovan, has decided against this proposal, and not allowing mortgage lenders to use the tax credit as down payment assistance.  He cites the need for buyers to meet minimum standards in the loan process, and the need for “real equity” in the transaction.  A complete copy of this letter is available on my blog at www.waldorfhomesolutions.com.

My next campaign is against the Charles County Commissioners Property Tax increase to begin July 1, 2009 for the fiscal year 2010.  The Commissioners have increased the rates from $0.968 per $100 assessed value to $1.026 per $100 assessed value.  This rate increase could not come at a worse time for Charles County homeowners and buyers.  A petition has been generated, and is being circulated by Southern Maryland real estate agents, in an attempt to have enough signatures for the general public to approve or reject the new tax rate at the next general election.  If you are interested in circulating this petition around your neighborhood, please contact me in my office at 301-870-1717 x106 or request  a petition via e-mail at don@dehanas.com.

One of my Lender-Partners passed this information along to me concerning the $8,000 tax credit. At one point HUD came out and infered they were working on a way to allow the tax credit to be used as down payment assistance. The following artical is the most recent response from HUD.  Unfortunately it is not the best news for 1st time home buyers, and the rest of our industry.

HUD has republished Mortgagee Letter 2009-15. Mortgage lenders are not permitted to monetize the tax credit for meeting the minimum downpayment requirements. Below is a copy and link to the letter.

http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2009_MORTGAGEE_LETTERS/09-ML-15%20USING%20FIRST-TIME%20HOMEBUYER%20TAX%20CREDITS.PDF

At quick glance, FHA has changed the letter by prohibiting FHA approved lenders and FHA approved nonprofits from using the tax credit to meet the 3.5% minimum downpayment requirement. While FHA approved lenders can “purchase” the tax credit, “the proceeds of the sale of the tax credit… may not be used to meet the 3.5% minimum downpayment requirement”. The proceeds may be used for additional downpayment (above the minimum 3.5%), buying down the interest rate and closing costs. HUD also effectively capped the lender fee at 2.5% of the tax credit. In addition, HUD has added due diligence requirements for participating lenders.

The letter states:

“The homebuyer’s downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs.”

HUD will continue to permit “government agencies and instrumentalities of government” to offer tax credit advances with second liens that can be used for the downpayment, closing costs and prepaid expenses. Currently, ten state housing finance agencies have programs that will apparently monetize the tax credit. These states are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee. Information on these programs is available at http://www.ncsha.org/section.cfm/3/34/2920.

Analysis

Based on feedback from many of you, we are not sure how helpful this policy will be. The Department is clearly concerned about risk with this program. At a Congressional hearing last week, the Secretary mentioned the need for “real equity” in the transaction. In light of the current market situation and the push for “skin in the game”, HUD concluded, consistent with the language from last year’s bill on seller funded DPA programs, that the borrower must meet minimum downpayment requirements on their own before considering the tax credit and changed the letter accordingly. State and local government agencies may continue to be used for minimum downpayment purposes.

While some news sources are reporting an increase in consumer optimism for the Washington DC region, the recent publication of housing statistics remains grim.  During the first quarter, home values in Charles County had dropped into the single digits of decline, indicating signs that we were approaching a flattening of home values, but a huge spike in April’s statistics pushed the decline back into double digits.  Year-to-date median prices fell from – 8.6% over last year to – 12.1% as we saw a 20% decline of median sale prices during the month of April over last years data.

While there were 145 contracts written last month in Charles County, only 59% of them, or 86, actually settled.  Arguably, there are some longer-term contracts which will offset future statistics in this area, however, you should note that there is a percentage of contracts that never make it to settlement.  While the level of inventory remained consistent to the previous month, the fewer amount of sold properties increased the overall supply of inventory vs. demand ratio, which currently represents 14.3 months of inventory supply, up from 13 months supply during March.  Further indications are that the inventory supply continues to rise ahead of demand by about 1% per month.   There is a steady flow of bank-owned inventory as well as preforeclosures hitting the market.  According to Realtytrac, there are currently 256 homes in Charles County in preforeclosure status.  During the month of April another 144 homes in the county went into default.

Another noteworthy statistic is the average sales price as a percentage of the average list price, which currently sits at 87.3%.  This percentage remains comparable to the previous month. For prospective purposes, a home is listed at $400,000. Market statistics tell us that a buyer will end up paying $349,200, which is 12.7% below the original list price.

Many buyer programs are still available, including the $8,000 tax credit for first time home buyers, and loan programs such as a rural development loan.  Many of my sellers will notice that we have begun advertising some of our homes with “100% Financing Available”. Any of our properties that qualify for the rural development loan have this banner in our ads. 

Details were expected last month from the Charles County Commissioners on the money allocated to Charles County from the Governments Housing Relief Program.  The Southern Maryland Board of Realtors is contacting the Commissioners weekly for updates, and have been told that the commissioners are still ironing out details of the program, and are making changes to it.  Currently there is no estimated time for which this program will be in effect.  The $5.1 million allocated to Charles and St Mary’s Counties is expected to assist buyers with closing help and offer incentives to purchase bank-owned homes.

 

DeHanas Real Estate Services has recently purchased the rights to syndicate DeHanas Teams listings on six new property search sites; Trulia  Real Estate Search, Zillow.com, Oodle, hotpads.com, propsmart, and CLR. Of course their own site, www.dehanas.com,  as well as Realtor.com remain to be the best sources for connecting with buyers in Southern Maryland.

 

DeHanas Real Estate also utilizes a number of other real estate search sites to promote their listings.  "Getting optimum exposure for a home for sale in todays market remains the key to finding and attracting a qualified buyer" says Don DeHanas, one of the Team's Listing Specialists.  "It is very expensive to advertise a home for sale, and we are in a difficult economic time where most agents don't have the budget to effectively market a home. Responsible budgeting and know-how is the formula for a successful marketing campaign. It is the "know-how" that the successful agent possesses that is often overlooked by sellers attempting to sell their home, which is why it more important now that ever before for a seller to align themselves with a seasoned real estate professional."

The DeHanas Team has been servicing home buyers and sellers in Southern Maryland for more than 30 years.

As reported by WTOP News, Prince Georges County will begin a stabilizing program aimed at helping area neighborhoods stop the growth of vacant properties, and the decline of dropping home prices. A big part of stabilizing the housing market is getting rid of all of those foreclosed homes. Starting May 1, one county will try to do just that.

With close to 7,000 foreclosed properties, Prince George's County is among the hardest hit areas.

"In order to stabilize these neighborhoods, we need to first get rid of these vacant homes," says Michael Chelst, vice president of America Home Key.

Prince George's County is teaming up with HUD and using federal dollars to sell vacant foreclosed homes at 15 percent less than the appraised value, Chelst says.

Selling homes less than the appraised value gives buyers instant equity.

The program in Prince George's County starts May 1. While the homes aren't limited to people with low incomes, there is a salary cap.

Some of the qualifications include first time homebuyer, or buying a home if you have not done so within the last 3 years.

For complete details on how to qualify and purchase a home using this program, please call DeHanas Real Estate Services at 301-870-1717.

 

It seemed as though Winter would never end this year. And if you have been searching for something new to do, it might be just as far as the next town over. With warming weather in Southern Maryland, comes an array of activities that the whole family will enjoy.  The Maryland Office of Tourism is a great way to begin your search for fun things to do in Maryland. Their website is www.visitmaryland.org, and it features hundreds of activities which are right outside your door, and many of them are free.

Did you know there is a 30 acre art and sculpture museum in Solomons. It is called Annmarie Gardens, in association with the Smithsonian Institute, and features museum quality art in a beautiful outdoor setting.  Daily activities include exhibits, scavenger hunts and toddler tours.

How about a wine tasting tour? Wineries and vineyards have been popping up all over Maryland, including Cove Point Winery and Vineyard in Lusby, and Friday’s Creek Winery in Owings.  Many Maryland wineries are within an hours drive of Southern Maryland, and offer beautiful panoramic views and great spots for a basket lunch.

A visit to Historic St. Mary’s City offers a fun way to learn something new about Southern Maryland. The state's first capital in beautiful tidewater Southern Maryland is St. Mary’s City. Archaeology and living history, replica 17th-century tall ship, tobacco plantation, town center and Indian hamlet. There is at least a full days worth of fun your family will enjoy.

Want something more structured? Southern Maryland Tours offers Historic guided tours in the Tri County area. Or visit Historic Port Tobacco for a guided tour through a Colonial village with one room school house and court house.

Of course with warmer weather comes an array of water activities. Being surrounded by water on three sides means plenty of fishing and crabbing, boating and swimming.  All of these activities and more can be found online with the Maryland Office of Tourism as well as in the Destination Maryland magazine offered at the Maryland Welcome Centers, as well as in our offices here at DeHanas Real Estate Services.  Get out there and enjoy what Southern Maryland has to offer.