Leave it to the ingenuity of the American public to find a new way out of their own personal mortgage crisis. The new thing that’s been going around the country is the “Buy and Bail” scheme. It’s possible that the scheme is around the Annapolis MD real estate market but who knows. This isn’t exactly the kind of thing that people publicise.
Many homeowners, despite having a mortgage on their existing house that is more than the value, still are paying the mortgage and have good credit. Not everybody, but a significant amount.
The way the scheme works is this: they apply and qualify for a new mortgage, telling their lender that they will be renting their existing house. The lender uses this “rental promise” as additional income in qualifying them to purchase a new home. Typically, they’re getting something cheaper and smaller.
Where it gets dicey is that they never really intended to rent out their existing home, they just needed the “phantom income” in order to qualify for the new loan. Once they get the new loan and move into the new house they “bail” on the old house. They don’t worry about their credit being trashed since they have a new house with a new loan.
Illegal, possibly. Unethical, definately. If you never had any intention of actually renting the old home, why lie?
Now that the scheme has been out there for a while the Fed’s are catching up. New lending guidelines include a provision that the sellers have a signed lease before they will count some, not all, of the rent as income to qualify for the new loan. These new provisions are for second home owners. Investors have a different set of guidelines. Your lender will be able to give you specific requirements suited to your individual needs.
For the past year or more real estate industry news has been characterized by the “sky is falling” variety. Yes, there are certainly a significant number of industry challenges to get over but by and large the media avoid any good news and concentrate on the bad.
One example and then I’ll get off my soapbox is prices. Median home prices of existing homes have increased in May for the third consecutive month. The new median price of a home is $208,600. The inventory for existing homes has decreased by 1.4% in May. These are both indicators that the market may be bottoming out and beginning a rebound.
Timing the exact bottom of the real estate market, as with anything else, is impossible. There are some great buys out there right now and most sellers are willing to negotiate. Waiting around to see if the market goes lower could be a mistake.
Whatever problems the economy is going through right now will change. Are you prepared to take advantage of that change?
A couple of weeks ago the REALTOR community here in Anne Arundel County was invited to a new Active Adult condo complex for a builder’s luncheon. I guess it’s…feed them and they will come.
Anyway, the condo’s were gorgeous, as expected, and reasonably priced. So Rich…why are you concerned?
There is so much Active Adult building going on in Anne Arundel County because of the school overcrowding conditions. Builders are allowed to put up Active Adult communities for the 55 and above crowd but not regular housing for the child bearing generation.
My concern lies a couple of years down the road when we start to see resales. Where are all these 55 and above buyers going to be coming from? It’s great now because the units are new and people just love buying new construction. If it was just a couple of Active Adult units I wouldn’t be too concerned but they’re sprouting up all over the place. We are already, or will be shortly, in a condition of overbuilding of Active Adult units in the county.
The amusing part is that the County actually thinks that allowing this type of housing is going to help with the school overcrowding conditions. The buyers for many of these units are selling their larger and older homes in the County to move into the Active Adult community. The buyers of their houses are younger couples with children. Where is the school savings? In all likelihood it’s not there and never will be.
Purchasing any new construction, including Active Adult housing, requires you to think through the entire process. Many buyers of new construction don’t take the time to think about what’s likely to happen a couple of years down the road.
The condo building will be there for a long time…but will the market for 55 and above housing be there as well?
The National Association of REALTORS® collects data and publishes pertinent information yearly. One of the recent statistics that was released was that first time home buyers account for 39% of all home purchases. Most of these first time home buyers (75% according to NAR) are living in apartments or currently renting.
Why move from an apartment? Because owning your own home is still a good deal. Interest rates are low and inventory is high in the Annapolis MD real estate market area so there are deals to be had for first time home buyers, as well as buyers trying to upsize or downsize.
Every time you write out your monthly rent check to your landlord, renters have to think about the missing value and equity for themselves. Why pay rent when you can own?
Over time real estate has been a good investment although everyone should be careful to understand that it is a long time investment and not generally a good idea for the short term. I always recommend to my buyers that if they’re not going to be in a home for at least three years than they might be better off renting.
The survey also indicates that most first time home buyers plan on moving within 5 years.
First time home buyers, seasoned veterans…the time is right to buy a home in the Annapolis MD real estate area.
There is an old saying, generally applied to economics that goes: “A rising tide lifts all boats.” When the economy is getting better, people interacting with that economy will generally be doing better as well.
During the heady real estate days of ‘04, ‘05 and the beginning of ‘06, the real estate market could also have been characterized as a “rising tide.” It wasn’t unusual in many areas of the country that housing was appreciating in double digits. All housing increased in value during this time, even if it was totally unrealistic and undeserving.
Fast forward to ‘08 and that tide has been ebbing for about two years now. The values that went up with the rising tide are now going down with the ebbing tide and there isn’t much that sellers can do for the time being. Real estate, being a heavily cyclic industry, the tide will turn again and housing prices will once again rise. Some of the industry experts have predicted that the latter half of 2008 will be the time that this will happen.
Here in the Annapolis MD real estate market area we’ve given back some of the appreciation that was generated during the “sellers” market. Of course, we’ve only given back a small portion of the appreciation and houses today are significantly higher than they were before ‘04. I’ll give back 10% or an appreciation of over 100% any day. Of course, there are some sellers who “froze” the value of their house when it was at it’s highest and now consider anything less as a “loss.” It was just a paper value if you didn’t sell your home during this period.
“A rising tide lifts all boats”
When the market turns, and it will, housing will once again be increasing in value almost everywhere. Historically, housing appreciation has been about 1-2% better than inflation. Real estate has always been a good value and will regain that position again shortly.
Thinking about selling your house in Anne Arundel County, Maryland. If you are than you need to make sure that your house is priced right and in great condition. Why? There are currently 4,408 houses for sale in Anne Arundel County right now and more coming on the market every day.
3,133 are single family detached homes and 1,275 are townhouses or condos. When you add in the immediately surrounding counties of Prince George’s, Baltimore and Howard you can see that there is a lot of real estate that your listing will be competing with.
You can’t control everything about your sale. For instance, the location of your house is set, nothing to do there. You can control price and condition though. In the buyers market we are currently experiencing, price is the most important factor to consider. While major remodeling won’t pay off you should absolutely make sure that the condition of your home is perfect. With over four thousand homes to choose from you’re going to have a lot of competition in your price range.
The good news is that if you’re upsizing or downsizing in the county you should be able to get a pretty good deal.
WOW! If you’re looking for the perfect house in the Davidsonville MD real estate area than your search has ended.
Davidsonville Maryland is a wonderful community with a rural feel but close to all major transportation routes and an easy commute into Annapolis, Baltimore and Washington, DC.
Some of the outstanding features of this 4 BR, 5 1/2 bath house include:
- 3 acres with two golf tees and a putting green
- In-ground pool
- Two story great room with brick fireplace
- Greenhouse with water
- Fish pond
- 3 sunrooms
- Gourmet kitchen with granite counters
- Formal living room, dining room
- Composite deck
- Eco friendly 2×6 construction
- too many more features to list
You can see all the details and more pictures of this terrific Davidsonville home for sale at www.3523Williamsburg.com.
To schedule an appointment to see this property contact Rich at 443-995-9595 or email Rich@RichSellsHomes.com.
When you do a home inspection and the inspector tells you that there’s Radon in the house, what do you think? If I stay in there for more than a few minutes I’m going to light up and glow in the dark. If that’s what you believe than let’s get a few facts straight.
First, Radon is a problem at high levels and needs to be mitigated. It comes up through the foundation of your house. Concrete is not a complete barrier. It breaths and it develops cracks over time allowing the radon trapped under the ground to come up into the house. Ironically, newer home construction is tighter and tends to trap any radon seeping up through the foundation in the house.
The Environmental Protection Agency, EPA, regulates radon and has set a maximum exposure of 4 picocures per liter as a level that is safe for humans. Radon is prevalent in the United States and can be found in every state to some degree. You can find a great deal of information about radon on the EPA website at www.epa.gov/radon.
How does radon apply to your real estate purchase in the Annapolis MD real estate area. Let’s say you’re purchasing a Crofton home for sale and you and your REALTOR® are writing an offer. A home inspection addendum can be added to the contract of sale as well as a radon contingency addendum. By checking off that you will perform a radon test within a prescribed period of time you have now put the seller on notice. The way the contract is written, if radon is found on the premises that exceeds the EPA recommendation than it will be up to the seller to mitigate the radon and bring it within acceptable levels. This isn’t very complicated but can approach about $1,000 to complete. If you don’t test for it and find it after the fact than you’re responsible for mitigation in order to protect your health and the health of your family. Over time, exposure to radon gas can cause serious health problems.
The key to dealing with radon is not to get overly excited. Mitigation is simple and straightforward. There are several companies in the Annapolis MD real estate area who specialize in radon mitigation and will guarantee to bring the levels below the EPA recommendation.
Your Crofton home REALTOR® can certainly help you get the home of your dreams…safely.
What’s the big deal about caulk? Over the years I’ve taken out a number of Annapolis MD real estate buyers to look at resale homes and you wouldn’t believe the number who are interested in the condition of caulk. Bathrooms, windows, sinks, they’re interested in all of it…but especially bathrooms.
One of the first thing many buyers do is to pull back the shower curtain and look at the condition and cleanliness of the tub and sink, and also the condition of the caulk.
Why are they so interested in caulk? I believe that it’s more psychological than anything else. If you (seller) are taking care of the small things, like caulk, than it’s more than likely that you’re taking care of the larger items as well.
Although it does take a little skill to apply, caulk is one of the cheaper fixes you can do to increase the likelihood of selling your home. Is it going to make the difference in a sale? No! Is it going to make a difference in the buyer’s mind about the condition of your property? Yes!
Considering the cost is less than $5 for a tube of caulk there isn’t much reason not to replace dirty or worn caulk before putting your home on the market.
Crofton home buyers are picky today and they have every right to be. Real estate is expensive and they don’t want to have to put much work or money into a house after settlement. Buyers do look at condition and think…”OK, this one doesn’t require any work and is in move in condition.” They also use the condition of the property to assess what their offer will be. Generally speaking, the better the condition, the higher the initial offer.
Borrowing a line from Shakespeare…”to caulk or not to caulk, that is the question.” The answer in this market is…CAULK!
Did you ever wake up at 3 in the morning in front of your TV and one of those infomercials is playing. “Buy real estate for $0 down”, “Buy homes at pennies on the dollar”, and a gazillion other come on titles.
All you have to do is send them a couple of hundred or a couple of thousand dollars and they’ll send you their foolproof package for becoming the next millionaire. I’m always amazed but somebody must be buying this stuff because infomercials are expensive to produce and run on TV.
Where we see it in the real estate industry is after they get their hooks into someone who tries to apply their program, most times without success. For example, after one of them ran I received a number of calls from people who wanted me to write up contracts on property at 1/2 the list price. One tipoff that they all gave was that they didn’t care where the property was…huh? All of a sudden, they buy a couple of hundred dollar program and they’re savvy investors. They just need to get some unsuspecting REALTOR® to do their leg work for them. The chance of a payout for either the REALTOR® or the “investor” is pretty slim.
In each case they were shocked that I declined their generous offer. 
I guess they didn’t get to that chapter yet or needed to go back over their notes to find out what to do next. My time is valuable and I reserve it for real clients and real investors.
The new one we’re seeing now are “letters of intent.” Basically, a fax is received for a listing agent saying that they have a purchaser for the listing who is willing to buy it at a severe discount. No escrow deposit, no contract…just this one page fax saying that they’ll buy the house, generally for about 1/2 the market value.
Letters of intent are used all the time on the Commercial side of the business and that’s fine, they work there. They have rarely been used on the residential side of Annapolis MD real estate. We have contracts of sale but that’s too much work to fill out for the bottom feeders. Why don’t I just troll the market with a pre-formatted “letter of intent.” I’m guessing it came directly out of the package that they bought from TV.
This situation is a little different though since listing agents are required by law to present all offers to their clients. I guess we can debate whether a “letter of intent” is a real offer but most agents are going to err on the side of caution and at least call their seller. After the laughing stops than the agent is free to ignore the letter of intent after properly documenting the sellers response. Why waste any more time.
There are plenty of bargains out there on the market today that buyers can take advantage of without resorting to these foolhardy tactics. Consult a Crofton homes REALTOR® and set reasonable expectations, do your research and make an offer. I don’t know any reasonable seller who would turn down an offer at a 10% reduction. When you’re looking for a 50% reduction you’re going to be disappointed by the response.
