All Things Frederick Blog

Closing or Settlement - The closing, or settlement takes place when the moneys are actually paid, ownership transferred, and the deed signed. Not to be confused when the “sold” sign is placed on the house. The house is sold when a “meeting of the minds” has taken place and the contract has been agreed upon by all parties. 

Closing Procedure - A closing involves the finalizing of two basic issues: 1. The promises made in the real estate sales contract are fulfilled, and the buyer’s loan is finalized, 2. The mortgage lender disburses the loan funds.  Attending the settlement will be the buyer, seller, their respective agents, and the closing agent or lawyer.  If all the work is done properly between the date the contract is ratified and the date of the settlement, the settlement should only take 1 to 1 1/2 hours.

The buyer’s Issues:  The title evidence, The seller’s deed, Any documents demonstrating the removal of undesired liens and encumbrances, The survey, The results of any inspections, Any leases if there are tenants.

The seller’s Issues:  Receiving payment, Compliance with contract requirements.

Both Buyer and Seller will want to inspect the closing statement to make sure that all the charges are correct.

Closing Statement - The Buyer and Seller should have gotten a closing statement (HUD 1) prior to the settlement so that they know all the charges that they will be responsible for.  The statement is arranged in 2 columns, one for the buyer, one for the seller, each showing the debits and credits for both.

Closing Fees - There are generally 7 categories of fees:
1.  Broker’s commission:  paid by seller.  
2.  Attorney’s fees.
3.  Recording expenses:  Fees are pain by whomever benefits from the particular service. 
4.  Transfer Tax:  Split 50/50, unless otherwise negotiated.  (In Maryland, the first-time homebuyer’s half is waived). 
5.  Title expenses:  In Maryland its customary for the buyer to order a title search and a binder for title insurance, and is charged for it. 
6.  Loan Fees:  The loan origination fee is 1 to 2 % of the loan, paid by the buyer.  They may also have discount points to buy down the interest rate.  There are other document fees, survey fees, and appraisal fees.
7. Tax Reserves and Insurance Reserves:  Most lenders require buyers to provide reserve funds or escrow accounts to pay for future real estate taxes and insurance.

Other possible fees are Prorations:  Accrued items like water bills.  Prepaid items such as fuel in a tank.

 Search for Homes                  

The Highland Real Estate Group                     
Chris & Karen Highland
301-831-9947
Real Estate Teams, LLC
isell4u2@msn.com

 
   What’s My 
 Home Worth?

Sometimes agents throw around real estate jargon like its common knowledge to all, when in fact, a lot of buyers and sellers don’t always know what we’re talking about.  I thought I’d write a series of blogs to define some of these terms, at least the ones I think are important. 

Addendum-There are several possible addenda that can be attached to a contract, depending on the issues added to the basic offer.  Paragraph 17 of the contract lists 22 of the addenda that can be attached. If the buyer wants any inspections, there are inspection addenda. There is an Inclusion/Exclusion addenda, to make sure what the buyer thinks is in the house actually comes with the house, HOA addendum, Local and County Addenda, Third-party Approval addendum are just a few.

Agency- Agency is simply a relationship between a client and an agent such that the agent is authorized to represent the client in certain transactions.  Years ago, there used to be only one type of agency, agents all worked for the seller.  Because of the efforts of consumer activists, other types of agency have come into use:  Buyers agency, Sellers agency, Dual Agency, Cooperating Agent, and Presumed Buyer agency.  In Buyer agency, the agent represents the buyer, with a written agreement, in a Presumed Buyer agency, there is not yet a written agreement. A Cooperating agent works for a real estate copany different from the company the seller’s agent works for, and can assist a buyer but has duty to the seller. Dual Agency happens when the buyers agent and sellers agent both work for the same broker. More on Broker later.

Appraisal- A report giving the opinion of a non-biased professional as to the fair market value of a property. It is usually an 8-part detailed report using specific guidelines in the USPAP, Uniform Standards of Professional Appraisal Practice.  Lenders require a professional appraisal to ensure that the house is actually worth the amount they are lending.

Association of Realtors- The self-policing Board that realtors belong to (and pay dues to). There is a local board, like FCAR, Frederick County Association of Realtors, and GCAAR, Greater Capital Area Association of Realtors. Then there is a state Board, MAR, Maryland Association of Realtors. And finally, a national Board, NAR, National Association of Realtors. Associations provide a code of ethics and standards, as well as many services to realtors.

Buyer Agency Agreement- A written agreement (contract) between buyer(s) and their Real Estate Agent and Broker, wherein the feduciary responsibilities of the agent are listed. The buyer(s) agree to work exclusively with the agent for an agreed-upon period of time. 

The statistics say it’s taking an average of 123 days to sell a house in Frederick County, telling me that many sellers don’t realize they can hurt their chances of selling their home by doing one or any of these five things:

1. Overpricing their home.  When the number of homes on the market is at an all-time high, about twice as much as a normal Frederick Market, sellers need to realize that buyers have the luxury of choice.  They will choose the best house for the least money. Normal market forces make that fact more of a reality than ever.

2.  Not keeping their house in the absolute best Condition is a sure-fire way for a seller to send a buyer down the street.  Competition in the Frederick real estate market is at an all-time high too, with 10 sellers for every buyer.  Buyers know that they can be choosy, and are choosing the houses in the best condition at the best price.

3. One of the best ways to keep your house from being sold is to keep it from being shown.  Being unavailable or making it hard to show is not the best strategy.  If a buyer’s agent has difficulty getting the OK to show your house, they will move on to the other 9 houses on their list, and chances are, they won’t come back.  The best way is to OK the showing ahead of time and just ask for notice.  Then keep your cell phone in your pocket.

4. Lack of proper Marketing is another way to keep your home from selling.  By proper marketing, I mean modern internet marketing, not newsprint.  Did you know that between 80% and 84% of buyers starts their search on the internet, before they look anywhere else?  Sellers need to make sure their listing agent is advertising on the dozen and a half real estate websites that are on the web.

The statistics also show that 25% of homes on the market sold in 30 days or less last month, telling me that some sellers are catching on and NOT doing the 4 things above.  Your house can be one out of 4, too, instead of 1 out of 10.

To Search for Houses on the MLS                  

Find Out What Your Home is Worth     

There are six things (most important) that any home seller has the right to expect in an agent that they choose to market their Frederick County Home.  Of course, there are many things a Listing agent should do, but these things are absolutely neccessary to assure you have the best real estate transaction possible. 

1. Your Frederick County Listing agent should be Internet Savvy. NAR (National Association of Realtors) statistics tell us that around 80% of home buyers begin their search on the internet, before they even connect with an agent. Your agent should not just have a website, but should be using it to its fullest. 

2. Your Listing agent should have Local Experience. They should know the market trends for your neighborhood, and for Frederick County.  Don’t be tempted to choose an agent from some other part of the state because they offer you a discount, or because they know your Aunt Sally.  What can they do to serve you when they don’t know the local market?

3. Ask someone for a Referral.  Statistics also say that 4 people you know or are acquainted with will have a real estate transaction this year.*  Contact someone you trust, ask them what their experience has been.  You wouldn’t pick a professional in many field without a referral, why should the biggest investment of your life be any different?

4. Your Frederick County Listing agent should be advertising your house on the Internet, where 80% of buyers are looking.  What are they doing to see that your house stands out?  They should have lots of (good) pictures, a visual tour, and they should be promoting your home on all of the dozen or more marketing sites that are on the web.

5. Your Agent, whether a buyer’s agent or listing agent, needs to be a great negotiator. That usually comes with experience, but some people just have it.  Either way, make sure that your agent has the skills to negotiate well on your behalf in a competitive market.

6. Last, and most importantly, your Frederick County Lising Agent should have honesty and integrity.  It almost goes without saying, they need to have a good reputation, and you need to be able to trust them to communicate with you everything you need to know to help you make good decisions.  My Dad used to say, “If someone is going to lie for you, then sooner or later they are going to lie to you.” 

Contact me to get a free market analysis, or to see homes for sale.        With record inventories in Frederick County, you want to make sure your listing agent can get your home SOLD!

*Buffini & Company

When will my house be worth what I paid for it?

Wow, do I hear that question a lot, almost daily.  Like a lot of answers to real estate questions, I’m afraid this answer is “It depends”.  I know that people get aggravated with that answer, but it’s the responsible answer. 

Generally, over time, real estate values go up.  It’s like getting on an elevator to go to the top floor.  You might stop at the 4^th floor and someone might get on and go down to the 3^rd, oops, a little market correction.  Don’t panic, just stay on the elevator.   Pretty soon you’re on the 12^th floor.  Someone gets on and goes down to the 9^th floor.  Big market correction.  You just lost 20 % of your floors.  But remember, you got on at the ground floor.  You still are ahead.  Keep riding the elevator, you know it will eventually reach the top floor.

But, What if you got on at the 12^th floor, and now you’re on the 8^th?  Basically, that’s what has happened in the market over the last decade, values shot up past affordability, now we’re having a large market correction.  Hopefully, you can stay on the elevator until you get past the 12^th floor. 

So, you see, it depends on when you bought it, and what you paid for it then.   It depends on how much of a correction needs to take place to get back to affordability.  With the present lending challenges and glut of distressed sales, it depends on how long it takes to work these challenges out.

I will venture to say, however, that the crisis of short sales and foreclosures is probably going to be with us for at least 2 or 3 more years.  Then we might see a leveling off of prices.  After they stop the decline, then we will hope to see the normal  4 – 6% yearly increase.    

The market statistics for Frederick County sales in July are out.  We still have about 10 months inventory, and the average sales price is down about 25% compared to this time last year.  The average number of days on market is 123, compared to 115 last year. 

Studying the statistics, I noticed two interesting trends:

1. FHA loans made up about 32% of the 187 closings last month. In June it was 29% and in May it was 22%.  With the changes in loan limits, and the relaxed requirements on the condition of the home, as well as other changes, FHA has become relevant again.

2.  The largest number of closings was in the $250K to $300K range; the second largest number was in the $200K to $250K range. 

What we’re seeing is that first-time home buyers are jumping into the market again. The prices are becoming affordable and buyers are able to get FHA loans to make it possible.  This is good news:)