Real Estate Marketing Specialists

Author Archives: Karen Highland

Should I Get A 15 Year Or 30 Year Mortgage?

Should I Get A 15 Year or 30 Year Mortgage?

This year has continued to be a time of new lows in mortgage rates; the 30-year fixed-rate mortgage averaged below 4% for last year (2016), setting a new all-time record lows. The 15-year fixed rate also averaged at historic lows, under 3%.

In 2017, rates are projected to go toward the mid- to upper-4% range. Even so, these are still super low rates historically.

There are many choices in mortgage products today, not just the 30-year mortgage and a 15-year mortgage. When rates are so low, many buyers can take a second look at something other than the typical 30-year mortgage. Many buyers, after seeing the list of mortgage rates, wonder, should I get a 15 year or 30 year mortgage? Good Question.

What is the difference between the 15-year mortgage and the 30-year mortgage?

Besides the obvious pay-off being half the number of years, the difference between the two is mostly experienced by home owners in the monthly mortgage payment. An example of a $300,000 home:

Sample Scenario of two $300,000 mortgages:

$300,000 Home Monthly Payment Life of Loan
Total Interest Paid
30-year-fixed mortgage = 3.5%   $1,347    $484,968   $184,968
15-year-fixed mortgage = 2.8%    $2,043    $367,741     $67,741
% Difference 48% higher payment 24%  savings  63% savings

You can use this handy mortgage calculator from Bankrate to see the difference in the two mortgage products. You can see that this 30-year fixed mortgage has the advantage of more reasonable payments, while the 15-year fixed mortgage is geared towards long-term savings overall.

The choice between a 15-year or 30-year mortgage comes down to your comfortable monthly tolerances. Some people tell me they don’t want to be “house poor”, or to say they don’t want to have only a little left at the end of the month after paying their mortgage. The 30-year fixed mortgage is the tool that will give you the lowest monthly payment possible by stretching out those payments over 30 years. The cost is more money payed to interest over those 30 years.

With a 15-year mortgage you are paying more towards the balance each month than you would with a 30-year mortgage. Some people live comfortably with higher mortgage payments and less expendable income. Some people buy well below the maximum of what they can afford, using a 15-year mortgage. There is an advantage to having your mortgage paid off in 15 years. The caveat to this payment arrangement is that your tax write-off will be less with a lower amount going toward interest each month.

It’s a lifestyle choice. It’s a subjective choice.

Paying Off Other Things

Part of the decision of which mortgage to choose is the consideration of other obligations you may have. If you have other debts with higher interest rates, you may want to consider paying those first, saving money in interest and payments the long run. In our example, the $700 extra you’d have each month by choosing a 30-year mortgage could be used to pay down debt.

Investing Elsewhere

Another consideration is the choice of investing that $700. Could you invest somewhere with a greater return than in your home? Using this IRA Investment Calculator from Bankrate, you would have $147,884 in your IRA after investing the maximum $5,500 a year for 15 years. (Subtract the $67,000 you might have saved if you had a 15-year mortgage and you’re still ahead.)

***This is where our DISCLAIMER goes…we are not financial advisers, we are REALTORS. We’re just raising questions for you to ask your accountant or financial adviser.***

Colin Robertson writes a very informative blog, The Truth About Mortgage, with 6+ years of news about the mortgage industry. He has some great charts to compare the payments with different interest rates. Use his handy charts to compare rates: [click to enlarge]

15 year mortgage rates

30 year fixed mortgage rates

“Should I Get A 15 Year Or 30 Year Mortgage?” It’s nice knowing you have choices, right? Knowing the numbers helps in making the choice.

Thanks to The Truth About Mortgage for these excellent interest rate charts! Be sure to read Colin Robertson’s blog for great information about mortgages.

Colin makes some other points that make sense when you consider them, but might not think about at first:

  • It is also possible to choose a rate for a 15-year mortgage.
  • The lower the interest rate, the smaller the difference in monthly payment. As rates move higher, the difference in payment becomes more substantial.
  • Higher mortgage rates are more damaging to larger loan amounts. If you look at the 30-year chart, the payment on a $400,000 loan amount at 3.50% is cheaper than the payment on a $300,000 loan at 6%.
  • Remember, this chart shows principal and interest only. There are often other items to consider, like Mortgage Insurance, property taxes and homeowners insurance. HOA fees and condo fees can also add to the monthly amount you need to consider.

Check out Colin’s blog for more great information. Another good read for those who want to dive deeper:  learn how are mortgages calculated.

Thanks, Colin, for these useful charts!


SEARCH for Homes in Central Maryland


The Highland  Group
Chris & Karen Highland   cell   301-401-5119
eXp Realty  410-777-5714

Homeownership, Buying and Selling Frederick MD: What to Expect in 2017

Homeownership, Buying and Selling Frederick MD: What to Expect in 2017

Central Maryland Real Estate Predictions for 2017

It’s that time of year again…and the Highland’s are getting out the crystal ball. I’ll be honest, when the market is in positive territory, we love to share our opinions, without feeling like they’re wild guesses. When there’s a lot of negative news, we’re pretty quiet. In matters of real estate, what can we expect in 2017?

Takeaways:

  • Homeowners can expect more modest gains in home values.
  • We expect demand to continue throughout the winter and into spring in 2017.
  • Interest rates are predicted to climb into mid- and upper-4’s. But…we’ll see…
  • We expect overall increases in sales, but in certain demographics and neighborhoods, there will be a robust real estate market.
  • New home building is back.

Increase in Home Values

In Central Maryland, we’ve seen a healthy recovery over the last 4 years. Most of the gains were seen in 2013, with an increase in the average home price of about 11% throughout the year. In 2014, average sales price increased roughly 1%, and in 2015 it was just over 1%. In 2016 we saw a brisk pace of sales with a less than ideal inventory, so we saw a 2% increase in average sales price over the year. See the chart for comparison:

 

Median sales price, which is often a better signal of what the market is doing, rose 2.5% from $265,700 in 2015, to $272,300 in 2016.

 

In 2016, average sales prices for single-family homes increased a 2%, from $341,300 to $349,300

while townhouse sales price increased 3% on average, from $222,300 to 228,500.

 

In 2016 we saw the demand increase 11%, from 3701 units in 2015 to 4093 units in 2016. At the same time, the average monthly inventory decreased by about 9%, shifting the market closer to a seller’s market, but still very balanced with a 4-month inventory throughout most of the year.

 

With a continued demand and an increase in inventory, we see no reason why home values won’t increase in 2017. The reason why we haven’t seen values skyrocket is two-fold:

  • The time on market increased in 2015 to 72 days (from listing to contract). In 2016 it was a very similar 73 days. Demand increased, listings decreased, but buyers still took their time.

The Highland’s take on this: The urgency is gone. 

  • We’ve been hearing that the interest rates are going up for two years now, but it hasn’t happened (significantly). We got a recent bump in rates, but then they just came back down. Buyers are aware of that. The frenzy to take advantage of low rates has dissipated. (The Fed raised rates at the end of 2016.)
  • Due to these factors, average home prices are increasing very modestly. Again, no urgency to take advantage of low prices and rates. Yet.

Real Estate Demand in 2016

As the economy strengthens, more jobs, 2.2 million in 2016, according to Bureau of Labor and Statistics, increasing consumer confidence, especially in the Washington D.C. Metro area, demand should continue at the pace we’ve been seeing for a few years.

Additional Reading:  These 5 Trends Will Shape the Housing Market in 2017

New households are forming, rents are rising (as much as 8% in 2016!), mortgage rates are low, and conditions are good for first-time buyers. In 2016, the majority of homes sold in Central Maryland were in the $200,000 to $300,000 range…many were first-time buyers.


 

Find out: What’s My Home Worth?  Get an online valuation. We’re also happy to do a custom Comparative Market Analysis.


 

Real Estate Inventory in 2016

As more homeowners gain appreciation, we’ll see more homes on the market. There is a large number of homeowners waiting for the return of equity so they can move on with their lives….those we’re calling “right-sizers“. This includes move-up buyers, downsizers, retirees, and those who desire to move to another location. As finances get healthier, we even expect more homeowners able to purchase second homes than we’ve seen in years.

According to Core Logic, Negative equity in U.S. homes (the share of mortgaged homeowners that are underwater, owing more on their home than it is worth) has steadily declined since a high of 31.4% in the beginning of 2012, to the most recent statistic of 6.3%, in the third quarter of 2016. Down from 13% one year ago.

New Home Sales

Frederick Real EstateBuilders have stopped avoiding the lower priced entry-level homes. The median new home price has come down over the last year, which shows that builders are responding with more affordable priced homes.  New homes jumped 16% year-over-year in 2016 nationwide.

In Frederick Md, we have many new construction projects underway.

 

Interest Rate Prognostications

It used to be easier for the economic experts to forecast what interest rates will be. With the increasing global economy, it’s gotten much more complicated to predict what will affect interest rates and what the Fed will do, and how banks and lenders will respond. Most predictions I’ve read are calling for 5% by the end of 2017. We’ll see.

Who’s Buying and Selling?

Millennials are expected to make up a larger portion of homebuyers this year. In 2016 they started to step into the housing market, and are expected to continue in the same pace throughout 2017.

Boomerang Buyers are back. During the housing crisis, more than 7 million homeowners suffered a foreclosure or endured a short sale. Many have healed financially and are ready to enter the homebuying market again. We’ve helped a few get back into homeownership this year. Typically, it takes an average 7 years to recover financially and credit-wise. Since the problems began in 2007, boomerang buyers are in recovery.

Right-Sizers, …basically, anyone who has been waiting for enough equity to move on, whether it be up, down or away. With negative equity down to 6%, we think many homeowners will be able to sell.

What Are they Buying and Selling?

We’ve seen a bifurcated market in Frederick Maryland for several years. Homes priced under $350,000 are appreciating, particularly townhouses. Homes priced over $500,000 are not appreciating much, and in most neighborhoods are taking longer to sell. Luxury homes, above $750,000 are beginning to sell again. But price appreciation is something we’re not seeing yet.Villages of Urbana Neighborhood

We expect a little more trickle up in the real estate market this year, as we will inevitably see more move-up buyers. The exception to most of these market trends is Urbana. The Urbana real estate market is and has been much more robust than most of Frederick County. The time on market is measured in days, while it’s measured in months in many outlying communities, like Myersville, Thurmont and Walkersville.


 

Find out: What’s My Home Worth?  Get an online valuation. We’re also happy to do a custom Comparative Market Analysis.


 

2016 Real Estate Market Trends

One of the national trends that we are seeing here in Maryland is the move to the city. Downtown Frederick is once again seeing increased building and an influx of home buyers.

  • Maxwell Square is complete, with the last row to be built. After 10 years of a stall, and a new builder taking over, the luxury townhouse-condominiums on 5th Street sold between $375,000 and $450,000.
  • Several infill homes have been built in 2015, from the Hemby homes on 5th Street, to several one-off’s here and there. We will more than likely see more in the coming year, as well as more renovations on older downtown Frederick homes.
  • North Pointe is in the final stages, with six homesites left. (as I type this…)
  • Just 4 blocks from downtown Frederick, the Eastchurch development on East Church Street is well underway. KB Home, Richmond American Homes and Wormald Homes are building condos, towns and single-family homes.

Another trend is the Demand for Amenity-rich suburbs. As some buyers get priced out of city centers, they’re looking at suburban housing but in a different light than in the past. The neighborhood “town center” has become a big demand. We see that in the newer developments in Frederick: Tuscarora Creek, Eastchurch, and Market Square. The Worman’s Mill town center is next on the agenda, finally coming to fruition after about 20 years.

Also called “Surban” communities—suburban neighborhoods offering the most desired features of urban and suburban living—will attract the most households in the United States over the next ten years, according to a demographic study by the Urban Land Institute.

Real Estate Trends that Never Go Out

No matter whether we find ourselves in a buyer’s or seller’s market, or no matter what demographic we are reaching, some things remain constant:

Sellers – If you want top dollar for your home, it must be in the best condition for the comparable homes in your market, and it must be priced right. These things never change.

Right-Sizers – Regardless of the market, deciding whether it’s the right time for you is a life-style choice. The right time to sell and down-size, up-size or move away, is when it makes sense to you…and when you have enough equity to do so.

First-Time Buyers – Interest rates are the number one item that affects affordability, over price of home. See this article on the affect of interest rates. Even so, with all the changes in market dynamics, there are basic questions you need to ask yourself to determine if this is the right time for you: Job Security, good credit, a plan to stay 5-7 years, a bit of money for a down payment, and the ability and desire to own your own home. Read more: Six Considerations Before you Buy Your First Home

 

Homeownership, Buying and Selling: What to Expect in 2017

Sellers, if you’ve been waiting for home prices to recover, 2017 may be a good year for you to be able to sell. The demand will be there, and even though the competition will also be present, if your home is in good condition and priced at market, you should have success. It promises to be a good year for sellers.

Buyers, if you’ve been on the fence, 2017 should prove to be a good year to buy. There will be many homes to choose from, interest rates will more than likely remain in the low-to mid- 4% range, still historically low, and home prices have been appreciating slowly, off to a modest increase. It promises to be a good year for buyers.

Here’s to a prosperous and happy 2017 to our readers and friends! Contact Chris Highland if you are considering a sale or purchase in 2017.


 

Find out: What’s My Home Worth?  Get an online valuation. We’re also happy to do a custom Comparative Market Analysis.

Six Things to Consider Before You Buy Your First Home

Six Things to Consider Before You Buy Your First Home

Buying a home is probably one of the biggest purchases most people ever make. It is certainly an important part of a life-long financial plan. If you’re thinking about becoming a homeowner, there are at least six things to consider before you buy your first home:

1. Your creditworthiness

Is your credit healthy? In today’s mortgage environment solid lenders are interested in your credit history.  If you have more than a couple of blemishes Six Things to Consider Before you buy your first homeon your report, some lenders may still provide you with a loan, but you may just have to pay a higher interest rate and fees.

You can request a free copy of your credit report from each of three major credit reporting agencies – Equifax, Experian, and TransUnion – once each year at AnnualCreditReport.com or call toll-free 1-877-322-8228. You are entitled to one free credit report per year.

If you have low scores or very little credit, you can work with a credit specialist to enhance your scores to the level that will help you not only be able to apply for a mortgage, but get better interest rates. [we have recommendations for credit counselors]

2. Determine How Much You Can Afford

To determine how much home you can afford, you can to online and use a “home affordability” calculator, but the results will only be a general figure which may or may not be very accurate. Good calculators will give you a range of what you may qualify for. Then you’ll need to call a lender to get pre-qualified and get a more accurate loan limit. This will also give you an estimate of what the monthly payment will be. Contact us for a list of preferred lenders.

The advice that buyers get ranges, some advise not to borrow as much as you qualify for because it’s wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow.

This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, you are comfortable with it. Consult a financial adviser to see how home ownership fits your long-range goals.

3. How long you plan to live in the home

If you buy a home and get a job transfer or decide to move after only a short time, you’ll probably end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.

The length of time that it will take to cover those costs depends on various economic factors in the area of the home. In a normal market, most parts of the country have an average of 3-5% appreciation per year. In this case, you should plan to stay in your home at least 5-7 years to cover buying and selling costs. If the area you buy your home in experiences an economic up turn, the length of the time to cover these costs could be shortened, but the opposite is also true.

4.  How long the home will meet your needs

What features do you want in a home to satisfy your lifestyle now? What about five years from now? Depending on how long you plan to stay in your home, you’ll need to make sure that the home has the amenities that you’ll need. For example, a two-bedroom home may be perfect for a young couple with no children. If they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Will you have money to do renovations, to the best of your knowledge? Having an idea of what you’ll need will help you find a home that will satisfy your needs for several years.

4.  Where the money for the transaction will come from

Most homebuyers will need some money for a down payment and closing costs, unless using a VA loan, which requires no contribution from the buyer. With today’s range of loan options, having a lot of money saved for a down payment is not always necessary.  FHA loans require a 3.5% down payment, making them a top choice for first-time buyers. Some loans allow contributions from parents, some have lender grants attached. Your lender will should have various options for you to consider.

In some cases, seller contributions are allowable. If that is necessary, make sure your buyer’s agent knows that upfront, so they can do their best negotiating for you. [contact us for buyer representation]

5.  The ongoing costs of home ownership

increase your home valueMaintenance, improvements, property taxes and home insurance are all costs that are added to a monthly house payment. If you buy a condominium, you’ll have a condo fee. If you buy in certain neighborhoods, a monthly homeowners’ association (HOA) fee might be required. If these additional costs are a concern, you can choose neighborhoods without these fees.

Make sure to do your research. Your lender and your real estate agent should be good resources for the information you need to make the best decisions.

Consult A Financial Planner

You may want to consult with an accountant or financial planner to help you decide how a home purchase fits into your overall financial goals. As Realtors, we are not financial advisers, nor is any content on our blog to be considered financial advice.


Search for Homes in Central Maryland


Chris Highland
eXp Realty
301-401-5119

Interest Rates and Home Affordability

The Impact of Interest Rates on Home Affordability

The total cost of a Frederick home is really determined by two factors:  the price of the home and the cost of financing, assuming the buyer is not paying in cash, which is about 90% of the time these days. The effect of interest rates on home affordability is larger than any other factor.

While many homesellers are chiefly concerned about the price of their home, home buyers should pay special attention to interest rates. As interest rates go up, the cost of borrowing goes up, and borrowing power goes down.

Interest Rates and Home Affordability

The interest rate plays a big role in determining your monthly mortgage payment. But how big a role?  This chart shows how the payment is impacted as interest rates go up:

 7.00
$1,198  1,231  1,264  1,297  1,331
 6.75  1,167  1,200  1,232  1,265  1,297
 6.50  1,138  1,169  1,201  1,233  1,264
 6.25  1,108  1,139  1,170  1,201  1,231
 6.00  1,079  1,109  1,139  1,169  1,199
 5.75  1,050  1,080  1,109  1,138  1,167
 5.50  1,022  1,050  1,079  1,107  1,136
 5.25     994  1,022  1,049  1,077  1,104
 5.00     966     993  1,020  1,049  1,074
 4.75     939     965     991   1,017  1,043
 4.50     912     937     963      988  1,013
 4.00     859     883     907      931     955
 3.50     808     831     853      875     898

 $180,000
-10%
 185,000
-7.5%
 190,000
    -5%
 195,000
   -2.5%
 200,000

 

You can see that as rates go up, the monthly payment goes up. If the interest rate goes up 1/2 %, you can afford roughly 2 1/2% less in the home value. (These are general numbers, calculated on a mortgage calculator.)

You may have delayed your home purchase decision because of concern over where PRICES may be heading. OR, you may be trying to save for a higher downpayment. Many would-be home buyers are under the mistaken notion that they need to have 20% of the purchase price saved in order to buy a home today. This is a false notion, as there are many loan products available today that require much less than that amount.

FHA loans currently require a downpayment of 3.5%. There are also many conventional loan products that require 10%, 5%, and even as low as 3% down, with contributions from family allowed. And lastly, VA loans are truly no money down loans available to Veterans.

To make the best financial decision for you and your family, also take into consideration where the overall COST of the purchase may be heading. The chart really makes clear the correlation between interest rates and home affordability.

Interest Rates are Headed…

After several years of historically low interest rates, the Fed raised the benchmark federal funds interest rate this week (December 14, 2016).  Even with Wednesday’s 0.25 percent hike, interest rates remain at near-record lows. Many mortgage experts are projecting that rates will continue to rise, but not rapidly. As they go up, affordability goes down.

As the economy strengthens, rates tend to go up…although today’s markets are increasingly global. Many things effect rates, not just or own economy. It’s never easy to predict today. Check out Bankrate for rate trends, calculators and general information.

Contact us for our list of preferred lenders to see how much you qualify for today.
The Highland Group     

eXp Realty
Frederick, Md 21701
301-401-5119

Frederick Real Estate Market Report November 2016

Frederick Real Estate Market Report November 2016

Real Estate Market Activity for Frederick County –November 2016

provided by the Highland Group

Real Estate activity in Frederick County is UP! Eveything’s UP. Here is a snapshot of Frederick County real estate statistics:

Real Estate Statistics in Frederick Md

Average Home Sales Price:  $324,357 , up from last year by 12%, and up 7% from last month’s average of $301,300.

  • Average Single-Family Sales Price:  $372,612, up 13% from last year at this time.
  • Average Attached Home Sales Price:  $234,611, up 2% from last year.
  • 199 single-family homes sold,  4% More
  • 107 townhomes and condos sold, 10% More 
  • A total of 306 homes sold in November, 24% more than last year’s number of 247.

Median Home Sales Price:   $294,000 compared to $250,000 last October: up 18%

Average Days on Market (DOM) the time it takes to get a contract: 59 days, down 22% from last year (76). This is a direct reflection of Demand in our market.

Number of Homes Sold:  There were 322 new pendings (homes that went under contract) 4% more than last November. The demand is certainly staying steady heading into winter, pent-up demand.

Total Listings in Frederick Md: 1,058, down 16% from 1,266 last year. The inventory is decreasing, but still close to what is usually considered a normal number for Frederick County. We’re seeing a balanced market, for the most part, with a 3-4-month absorption rate.

** If demand is still strong for the season and inventory is decreasing, this is a good time to sell!

Keep in mind: In some price ranges, in some areas of the county, there is naturally a higher demand and the market is more competitive for buyers. Some neighborhoods, like Urbana, Middletown and several in the city of Frederick, are in high demand, and have lower absorption rates.  Some smaller communities on the outskirts of Frederick County, Myersville, Thurmont, Woodsboro, are less in demand and homes take a little longer to sell. When we drill down to the neighborhood level, there are differences in demand as well. All reasons to consult an to find out supply and demand in your area.

Sellers got 96% of list price on average, compared to 94% at this time last year. The fact that this number is higher than last year shows that the demand is still strong, even though the holidays are approaching when the market usually slows down.


See Homes for Sale in Frederick Maryland


What’s Notable:

  • This Fall did turn out to be a good market to sell. If you’ve been waiting for values to rise, this year has been a good, steady year of rising values. If you’re waiting for a market with less competition, this winter is it. The inventory is pretty low, while the demand is still high.

What’s My Frederick Home Worth?


  • Interest rates have risen just to above 4% recently, but that’s still incredibly low! See today’s rates.
  • The inventory has decreased this Fall, which is usual for the season, and is lower than last year, but with steady demand, we might see more of a seller’s market. Up until now, we’ve seen a balanced market in most communities in the county. We will expect multiple offers on the homes that are in great condition and priced at market… and this will continue to put upward pressure on home prices. Homes that are priced well and in the best condition, and in areas of demand, are sold in weeks or even days.
  • Cash deals were 14% of sales. As appreciation is expected, we’re still seeing Investors and flippers in the Frederick market. 46% of loans were with Conventional financing, outpacing FHA loans, which were only 19%. 9% were VA. Interestingly, 12% were “other” financed.
  • **The majority of home sales took place in the $200,000 to $300,000 price range. 33%. Interesting note: The majority of listings are in the $300,000 to $400,000 price range, and then the 2nd highest number of listings are in the $400,000 to $500,000 price range.

November 2016 Market Statistics provided by MRIS (Mid-Atlantic Regional Information System)

*MRIS – Metropolitan Regional Information System – These statistics are not guaranteed but are considered accurate. Frederick County Real Estate Market Update for November 2016.

Contact Chris Highland to see homes for sale in Frederick Md.


301-401-5119

Ten Reasons to Sell Your House This Holiday

Ten Reasons to Sell Your House This Holiday

The Holidays are Are A Great Time to Sell Your Home!

Thinking about selling your home? Maybe to downsize, or move up, or even go somewhere warm?

Many sellers are waiting for spring, but why wait? Why wait for more competition? The Holidays are a great time to sell your home. Here are 10 good reasons to NOT wait:

  1. There is a good supply of buyers this year. Motivated buyers, not just recreational buyers. There are serious buyers who need to relocate for various reasons.
  2. There is less competition during the Holidays, which is a good thing when you want to stand out. Most buyers are looking online, and they’ll find you much easier when there are fewer homes on the market.
  3. You home looks great! Christmas decorations are lovely.
  4. Your neighborhood looks great too.
  5. Buyers who are searching have more time to look when they are off work during the holidays.
  6. Your REALTOR understands it’s the holiday season and you can show your home when you want.
  7. Everyone is in a good mood, because it’s the holidays.
  8. Sell your home now and you’ll be in a better negotiating position, without a home to sell.
  9. Interest rates are super low right now.
  10. If you sell now, you won’t have to mow the lawn ever again!

Contact the Highland Group and we’ll help you get it sold!

What is “Buyer Agency” in Real Estate?

What is “Buyer Agency” in Real Estate?

What is Buyer Agency in Real Estate?

Representation

If you’ve bought or sold real estate in Maryland since 1999, you’ve been given an “Agency Disclosure” amongst the myriad of paperwork your real estate agent hands you.  The Agency Disclosure is not a binding agreement to anything, it is merely a statement disclosing the various types of agency a Maryland Realtor® offers.

Maryland is a progressive consumer advocacy state, and as such, was on the cutting edge of Agency, compared to many of the states in the U.S. Before Jan. 1, 1999, all Real Estate agents represented the seller. ie. worked for the seller. There was no representation for a buyer, no one to negotiate on their behalf, legally.  Prior to that time, there was a lot of confusion, a lot of misleading information, and a lot of ignorance of the issue.

What Is Agency?

At the first scheduled face to face meeting the Realtor assisting you is Realtorrequired by the Maryland Real Estate Commission to provide a notice entitled “Understanding Whom Real Estate Agents Represent”.  This explains the following forms of Agency or representation:

A.  Agents Who Represent the Buyer
1.  As of October 1, 2016, there is no more Presumption of Buyer’s Agency – what used to be the instance where there was no written agreement, but the agent could show houses to the buyer.  There was the presumption that the agent was working for the buyer. During the course of working with the agent, the buyer would typically sign an agency agreement, certainly before making an offer on a house. The agent cannot be paid unless there is a written agreement.

After October first, of this year, the Maryland Real Estate Commission did away with presumed agency. Now, as per law, the first time a buyer meets with an agent, they must sign a buyer agency agreement. Read more about how the change in the Maryland Agency laws will affect home buyers.

2.  Buyer’s Agent – When working with a buyer, an agent must get a written agreement between the buyer and themselves. Then the agent represents the interests of the buyer, may negotiate on their behalf and has a fiduciary duty to the buyer. It is also known as Buyer Representation.

3.  Dual Agent – this one is tricky because it is different in different states. In Maryland, a real estate agent may not represent both the buyer and the seller. It really is a conflict of interest in a negotiation. Usually, when an agent finds themselves working with a buyer who wants to write an offer on the agent’s listing, the Broker will assign another agent from the same firm to represent the buyer. In the situation where a buyer and seller are working with agents from the same brokerage, the Broker is the Dual Agent. He or she must stay neutral in the representation of the buyer and the seller.

B.  Agents Who Represent the Seller
1.  Seller’s Agent – The agent that lists and markets the property.  He exclusively represents the seller, his duty is to the seller, even though he may assist a buyer who is unrepresented. In the case of an unrepresented buyer, the listing agent is must give fair and ethical treatment to the buyer

2.  Cooperating Agent, or Subagent of – An agent from a different brokerage than the seller’s agent, can assist the buyers in purchasing, but has a duty to the sellers.

To tell you the truth, we rarely see a “cooperating agent”. Most buyers want a buyer’s agent if they are working with an agent other than the listing agent.

Why A Buyer Should Have Representation

Why do you want representation? A buyer’s agent offers a lot of value to today’s home buyers. The buyer’s agent is earning their money commission from the home sellers if the listing agent has agreed to share the commission with a cooperating agent. So it is no cost to the buyer.

When you consider the many moving parts of a negotiation, it is a big benefit to the buyer to have an agent representing them, helping them create a negotiating strategy. They also benefit with an experienced local agent helping them determine an offering price. A buyer’s agent will be able to do a comparative market analysis, CMA, that will help the buyer make a good offer. As a buyer, you don’t want to overpay, but you also don’t want to lose in a competitive bidding scenario. You want to make sure that the home will appraise close to your offer price, too, if you are financing the house.

Real estate agents are working in the local market every day. They see the inventory, know the values, and they are negotiating all the time. Most homeowners buy and sell every 7 or 8 years. Without an agent representing you, you are at a disadvantage. It’s great to have an advocate on your side.

So, I hope that makes it clearer. Sometimes it takes a conversation to really explain these things well. Be sure and ask your Realtor to explain it, not just hand you a disclosure about Agency.

The Highland Group
eXp Realty
Frederick, Md 21701
301-401-5119/cell  410-777-5714/Broker

Search for homes in Central Maryland

Thankful

Thankful

Thankyou to our clients, friends, neighbors and family for the opportunity to help you with your real estate needs. We’ve been helping families make Frederick and central Maryland home for nearly 25 years, and we are grateful for the opportunity to build our business in this lovely community.

Frederick County Real Estate Market Update October 2016

Frederick County Real Estate Market Update October 2016

Real Estate Market Activity for Frederick County –October 2016

provided by the Highland Group

Real Estate activity in Frederick County has increased over last fall. Here is a snapshot of Frederick County real estate statistics:

Real Estate Statistics in Frederick Md

Average Home Sales Price:  301,362 , up from last year by 14%, and up 2% from last month’s average of $294,596.

  • Average Single-Family Sales Price:  $345,763, up 6% from last year at this time.
  • Average Attached Home Sales Price:  $241,756, up 8% from last year.
  • 196 single-family homes sold, compared to 189, 4% More
  • 146 townhomes and condos sold, compared to 130, 12% More 
  • A total of 342 homes sold in October, 7% more than last year’s number of 319.

Median Home Sales Price:   $270,000 compared to $265,000 last October: up2%

Average Days on Market (DOM) the time it takes to get a contract: 70 days, up slightly from last year (68). This is a direct reflection of Demand in our market.

Number of Homes Sold:  There were 354 new pendings (homes that went under contract) 4% more than last October. The demand is certainly staying steady heading into Fall, pent-up demand.

Total Listings in Frederick Md: 1,147, down 17% from 1,386 last year. The inventory is decreasing, but still close to what is usually considered a normal number for Frederick County. We’re seeing a balanced market, for the most part, with a 3 month absorption rate.

** If demand is still strong for the season and inventory is decreasing, this is a good time to sell!

Keep in mind: In some price ranges, in some areas of the county, there is naturally a higher demand and the market is more competitive for buyers. some neighborhoods, like Urbana, Middletown and several in the city of Frederick, are in high demand, and have lower absorption rates. The communities on the outskirts of Frederick County, Myersville, Thurmont, Woodsboro, are less in demand and homes take a little longer to sell.

Sellers got 97% of list price on average, compared to 94% at this time last year. The fact that this number is higher than last year shows that the demand is still strong, even though it is fall, when the market usually slows down.


See Homes for Sale in Frederick Maryland


What’s Notable:

  • This Fall is turning out to be a good market to sell. If you’ve been waiting for values to rise, this year has been a good, steady year of rising values. If you’re waiting for a market with less competition, this is it. The inventory is pretty low, while the demand is still high.

What’s My Frederick Home Worth?


  • Interest rates have risen just slightly to about 3.7% recently, incredibly low! See today’s rates.
  • The number of sales have continued to be healthy as we enter the Fall months, with a higher demand than last year, we had a higher number of homes go under contract than last year, sometimes “Pending” is a term you may see. The total waiting to close is 671, compared to 629 at this time last year, an increase of 7%.
  • The inventory has decreased going into the Fall, which is usual for the season, and is lower than last year, but with steady demand, we might see more of a seller’s market. Up until now, we’ve seen a balanced market in most communities in the county. We will expect multiple offers on the homes that are in great condition and priced at market… and this will continue to put upward pressure on home prices. Homes that are priced well and in the best condition, and in areas of demand, are sold in weeks or even days.
  • Cash deals were 14% of sales. As appreciation is expected, we’re still seeing Investors and flippers in the Frederick market. 37% of loans were with Conventional financing, out pacing FHA loans, which were 27%. 11% were VA. Interestingly, 11% were “other” financed.
  • **The majority of home sales took place in the $200,000 to $300,000 price range. 34%

National Real Estate Statistics

  • Year-to-date, new home sales are running 13.4% ahead of the number in 2015*
  • The annual survey of recent homebuyers shows that 88% financed their purchase, according to the National Association of Realtors®, up from 86% last year. First–time homebuyers financed 96% of the home price, on average, while repeat buyers typically financed 84%. *
  • The average rate on 30–year fixed–rate mortgages in Freddie Mac’s survey climbed 7 basis points to 3.54% during the week ending November 3.

*NAR Statistics

October 2016 Market Statistics provided by MRIS (Mid-Atlantic Regional Information System)

*MRIS – Metropolitan Regional Information System – These statistics are not guaranteed but are considered accurate. Frederick County Real Estate Market Update for October 2016.

Contact Chris Highland to see homes for sale in Frederick Md.


301-401-5119