Friday, June 30, 2006 - Below-market Interest Rates through CDA

For those of us who remember 17% interest rates, today's interest rates still seem like a bargain. That's little comfort for buyers who have watched rates climb steadily for the past three weeks.

However, the State of Maryland has a financing program called More House 4 Less that includes below market interest rates and even a state grant for closing costs.

There are, of course, limits -- in some areas, you may need to be a first time homebuyer. You must plan to occupy the house as your principal residence. The maximum purchase price for Prince George's County is $417,000.

Paul Richardson with SunTrust Mortgage has lots of experience with these loans. It's worth sending him an email (click on his name to send an email) or calling him at 301-507-6064 for more information.

CDA offers 100% financing, 30 year fixed rate loans, or even a 35 year fixed rate loan with the first 5 years paying interest only. Unlike many of the horror stories you've heard, the interest rate is fixed for the entire 35 years. It's a great program!

(C) 2006 Susan Pruden.

Thursday, June 29, 2006 - Market Changes for Agents Too

For the past several years, soaring house values have brought an increase of another kind – the number of real estate agents in our area. I knew we had added lots of new agents, because I no longer recognize the majority of faces at industry events.

I also know that the competition for listings and buyers has increased dramatically. I know fewer and fewer of the agents showing my listings.

What I didn’t realize is that 70% of the agents who belong to the Prince George’s County Association of REALTORS® (PGCAR) joined since 2003. In June 2003, we had roughly 1,360 agents. Now we have 4, 618. That’s a stunning 238% increase in membership in just 3 years.

This means that more than two-thirds of the agents who belong to PGCAR as their primary board have been licensed for fewer than three years. Their experience is limited to a hot market where houses sell in days or hours.

But now that the market has cooled and the prospect of quick money is gone, the newbies are likely to start pouring out. More people are expected to leave as the expenses and the unrelenting pressure to sell mount.

I think that a lot of newer agents aren’t ready for the stress and the hours of anything other than a hot market. They don’t know how to make a house sell when there are so many for sale. A slower market is a more expensive market for real estate agents and the paychecks may be fewer.

I already know several agents who have taken another job to make ends meet. It’s frustrating for me (I work full-time in real estate) to work all day long and then have to work in the evening as well – just to reach agents who are un-reachable during the day.

I’m proud of the agents who made an effort to really learn our industry. They’ll be successful regardless of the type of market we’re in. I’ll be just as happy to see the last of those looking for easy money.

(C) 2006 Susan Pruden.

Wednesday, June 21, 2006 - Settlement and Moving Out

What happens when the seller needs to stay in the house after settlement? Sometimes it's as simple as settlement happening on Friday and the movers aren't coming until Saturday. Sometimes the seller's new home isn't ready quite when expected. Sometimes it's planned for from the very beginning and sometimes it pops up at the last minute.

When this happens, it's called a Post-Settlement Occupancy. Typically, the seller will pay rent, which amounts to the buyer's mortgage payment, broken down into a daily amount. The seller will also pay a security deposit against damage done during the rental period. The Post Settlement Occupancy Agreement for Prince George's County is six pages and lays out in detail what is expected of each party and what happens if and when things go wrong.

In this situation, I recommend that buyers do two walk-throughs of the property. Once prior to settlement and then again once the post-settlement occupancy period has ended and the seller has moved out. I've had agents argue with me that the first walk-through is unnecessary since the seller is still living in the house. Once I've explained why two are necessary, I've never had a problem.

The first walk-through allows the buyer to determine that the property is in substantially the same condition it was in when the contract was accepted. It is a step in bringing the contract itself to a close. However, in the case of a post-settlement occupancy, it also establishes a baseline for the second walk-through. The parties have changed roles in the second walk-through -- the buyer is now the owner and the seller is now the tenant. The second walk-through has nothing to do with the contract of sale and has everything to do with the new contract, i.e., the Post Settlement Occupancy Agreement.

Of course, there are  risks involved in granting a rent-back, (the seller may not move out on time, damage may be more than the security deposit, etc.) so it's important to have a thorough discussion prior to agreeing to one.

 Next time I'll discuss Pre-Settlement Occupancys and some of the risks involved.

(C) 2006 Susan Pruden.

Tuesday, June 20, 2006 - A Tip For Home Sellers

It occurs to me that using the Checklist For Preventing Water Losses, mentioned in the previous post, would be a good idea for sellers -- this is the type of maintenance that impresses buyers and home inspectors!

So, if you haven't done this for peace-of-mind while you live in your home, do it for the next owner. It could benefit your pocket as well.

In today's market, homes aren't selling "as-is" as frequently. Now we're seeing home inspections returning with laundry lists of repairs that the buyer wishes done in order to proceed with the purchase of the home. Good maintenance can and will reduce the number of items on the list.

(C) 2006 Susan Pruden.

Tuesday, June 20, 2006 - Water Damage and Homeowner's Insurance

I guess I'm sort of on an insurance kick right now...I haven't had any claims, so I'm not really sure why it's on my mind. Actually, what's really on my mind is maintenance and how it affects insurance.

According to The Institute for Business & Home Safety, water damage is the number one cause of homeowners insurance claims. According to the IBHS, the most frequent water claims involve:

• Toilet overflows
• Burst washing machine hoses
• Failed water heaters
• Leaking air conditioning condensation lines and drain pans
• Leaky shower pans

USAA (my insurance company) offers a Checklist For Preventing Water Losses to help you determine what areas to check in your home.

As soon as I finish typing this, I'm printing a copy and going on a tour of my home. I'll let you know how we fare.

(C) 2006 Susan Pruden.