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Information relevant to Frederick home buyers

Explaining Housing Affordability

Explaining Housing Affordability

Explaining Housing Affordability

Housing Affordability Continues to Be A Challenge

These are the headlines recently…several times, as the record keeps being set. What exactly does the term “Affordability” mean?

The National Association of Home Builders (NAHB) and Wells Fargo have been calculating the Housing Opportunity Index (HOI) for more than 30 years.

The latest HOI data show in all, 65 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $65,700. This is up from the 63.3 percent of homes sold that were affordable to median-income earners in the fourth quarter.

How is the HOI calculated?

The housing cost calculation takes into consideration the price of homes and the interest rate. Today’s sub-4% rates have made a huge impact on housing affordability.

For income, NAHB uses the annual median family income estimates published by the Department of Housing and Urban Development. They use the figure of 28% of gross income as an average amount home buyers can afford to spend on housing. That 28% of average income is divided by 12 to come up with a monthly amount allowable for a mortgage.

Affordability for Frederick Md

When explaining housing affordability, it must be noted that local markets are different. While the National Affordability Index is at 65%, the local markets vary.

Frederick-Rockville-Bethesda, MD has an affordability index of 72%. The median income for this area is $109,200, the median home price is $335,000. (It’s interesting to note that five years ago the median income was $113,000, the average home price is $305,000, and the affordability rate was 75%.) 

The median income for Frederick Md residents is $65,328 (down from $66,642 five years ago) according to Google, and the median home price in Frederick is $295,000. Without an exact number, I’m willing to guess that the affordability index for Frederick is higher than Rockville and Bethesda.

Incidentally, the MOST affordable area is Cumberland Maryland, where 98% of households can afford the median priced home of $145,000.


SEARCH for Homes in Central Maryland


The Highland Group
eXp Realty
Frederick, Md 21704
301-401-5119

Do I Need to Be Pre-Approved For A Mortgage to Make an Offer on a Home?

Do I Need to Be Pre-Approved For A Mortgage to Make an Offer on a Home?

APPROVAL, PRE-QUALIFICATION AND LENDER LETTERS

Buying a house is not an event, it is a process. Most of the time in today’s post-bubble, post-TRID real estate market, the process is a little more complicated and takes longer.

As the process gets more complicated, the anti is upped for everyone, including the buyers. Having a pre-qualification letter from a local, reputable lender is a must before most sellers will consider a buyer’s offer.

  • Bank-Owned properties, or Foreclosures, will not consider an offer from a buyer without a letter from a lender pre-qualifying that buyer for the amount offered. Many times, the bank will insist that the buyer get pre-qualified with their own lenders before they will consider the offer.
  • A short sale requires the approval of the third-party(s), the lender(s) who hold the note on the home. They will want to be assured that the buyer will be approved for the loan, so they don’t have to have the home back on the market if that buyer doesn’t qualify for the loan.
  • Traditionally marketed homes without the encumbrances of bank approval have the choice as to whether or not they will require a pre-qualification letter with the offer. In this environment a homeowner would be crazy not to require a lender letter along with the offer from a potential buyer. Any listing agent will advise their seller client to require a pre-qualification letter. A seller wants to be assured that the buyer can make good on their offer before tying the home up in a contract and taking it off the market.

HOW TO GET A PRE-QUALIFICATION LETTER

A buyer can get a pre-qualification letter in a short time, initiated with a phone call, most of the time. Your lender should tell Frederick Md Lendersyou precisely what you need, but be prepared to include:

  • W2 statements (or 1099 income statements) for the last two years
  • Federal tax returns for the last two years
  • Bank statements for the last few months
  • Recent pay stubs and proof of other income
  • Proof of investment income

When a buyer gets a pre-qualification letter, the buyer isn’t obligated to borrow from that lender; it’s just a conditional promise that the lender is willing to make the loan. We always advise buyers to get pre-qualified with a strong local lender.

Remember, it does no good to hide information, it will eventually come out anyway. Borrowers must be completely forthcoming when it comes to their finances from the beginning to avoid any last minute surprises and disappointments.

PRE-APPROVAL

Pre-approval is exactly that. A buyer can apply for a loan and go through the process of getting approved by the lender before they even make an offer on a home. In a competitive sellers’ market, it can be a good idea. Then when a buyer finds a home they want, they can make an offer with not just a pre-qualification letter, but with a stamp of approval. The extra leverage of having the proof that the buyer can get financing may just be the additional tool that makes them stand ahead of the pack when there are competing offers.

As a buyer, if you’re a planner, this preliminary step of pre-approval might make sense. However, if you are looking in today’s highly competitive sellers’ market and find your dream home…don’t hesitate. If the home is in great condition and priced well, it may not be available for long. There is always a balance between keeping a cool head and knowing when to jump on the right home. (That’s why you need an experienced agent as your trusted adviser…I know, I seem to say that a lot!)

In today’s times where the process is more complicated, it’s a good idea to get the loan process started as soon as possible. Lenders tell us all the time, the best scenarios happen when buyers are prepared and prompt with their paperwork. With the changes in the process because of new legislation (TRID) it is absolutely necessary to be prompt on the paperwork.

Contact us for our list of Professional Local Lenders. Search for homes in central Maryland.

Facts Homeowners Should Know About Radon

Facts Homeowners Should Know About Radon

Living Healthy and Green Starts by Kicking Radon Out

Do you want to help your community step out on the green side of living and building healthier? EPA has developed a new media campaign, Living Healthy & Green, to educate Americans about the ease of testing for radon and building new homes radon-resistant. These unique public service announcements (PSAs) help remind Americans that a big part of “living green” starts in their home with breathing cleaner, healthier indoor air.  Learn More about Radon Public Service Media Campaigns

Every Living Healthy & Green campaign element can be viewed, heard and ordered free on line at www.epapsa.com

Radon:   The Health Hazard with a Simple Solution

Radon is a cancer-causing natural radioactive gas that you can’t see, smell or taste. Its presence in your home can pose a danger to your family’s health. Radon is the leading cause of lung cancer among non-smokers. Radon is the second leading cause of lung cancer in America and claims about 20,000 lives annually.

Test Your Home for Radon – It’s Easy and Inexpensive   Fix your home if you have a radon level of 4 pCi/L or more.

The U.S. Surgeon General and EPA recommend that all homes be tested. You can test your home yourself or hire a professional. Fix your home if you have a radon level of 4 pCi/L or more. Radon test kits are available from the National Safety Council (or call 1-800-SOS-RADON). Some home improvement stores sell test kits. (Lowes and Home Depot both do) To find a qualified testing or mitigation contractor, contact your state radon office (see our list of state contacts) or either of the national private radon programs.

Exposure to Radon Causes Lung Cancer In Non-smokers and Smokers Alike

Lung cancer kills thousands of Americans every year. The increase in deaths due to lung cancer has raised public awareness about lung cancer, especially among people who have never smoked. Smoking, radon, and secondhand smoke are the leading causes of lung cancer. Although lung cancer can be treated, the survival rate is one of the lowest for those with cancer. From the time of diagnosis, between 11 and 15 percent of those afflicted will live beyond five years, depending upon demographic factors. In many cases lung cancer can be prevented; this is especially true for radon.

Sources of Radon

Radon escapes from the soil, into the air and into buildings and homes. The majority (69%) of radon that effects humans comes from the soil.18.5% comes from well water, 2.5% comes from building supplies, and 9.2% comes from outdoor air.

Normal levels found in outside air are 0.4 pCi per liter, which is considered safe by the EPA. The average indoor radon level in the U.S. is 1.3 pCi/L, also considered safe. When levels rise to 2.7 pCi/L, a person’s risk of lunch cancer rises 16%, according to the World Health Organization. The EPA recommends corrective action when the indoor level of radon reaches 4Ci/L.

Radon in Maryland

There are three zones in Maryland, each showing a level of average radon density. in Zone 1, the Red Zone, the following counties have a predicted average indoor radon screening level greater than 4 pCi/L: Washington, Frederick, Carroll, Baltimore, Harford, Howard, Montgomery, and Calvert.

In Zone 2, Orange Zone, counties have levels between 2 and 4 pCi/L: Garrett, Allegheny, Cecil, Ann Arundel, Prince Georges, Charles and St. Marys Counties.

In Zone 3, Yellow Zone, there is low potential of high radon levels, less than 2 pCi/L: Kent, Queen Anne’s, Talbot, Caroline, Dorchester, Wicomico, Worcester, and Somerset Counties.

Legal Requirements in Maryland

Montgomery County recently passed a law requiring home sellers to conduct a radon test. The wording of the law is such that sellers can conduct the test themselves, or hire a professional. The test must be from a list of approved radon tests. (which you can find on the NRPP Website) Many on the list are low-priced kits you can get at Home Depot or Lowes. The Pro-Lab test is $20.

As of today, other counties do not require testing, but we expect that it won’t be long before the counties in the red zone follow Montgomery County in this requirement. Even though it isn’t mandatory, we encourage buyers to have a radon test with their home inspection, using a qualified radon tester. Even if the homeowner has carried out a radon test within 12 months of listing the home, it’s still a good idea to have your own test. With radon tests, you can’t know if there was human error involved. Better safe with your own test.

What if the Radon tests high?

If you find that the Radon levels are 4 pCi/L or higher, Radon mitigation will be required. There are three common radon remediation systems used in residential construction:

Active Subslab Depressurization (ASD) is a system designed to lower sub-slab air pressure relative to indoor air pressure by using a fan-powered vent. By drawing the air from beneath the basement slab through a pipe and out of the roof, radon is prevented from entering your home. Often only a single suction is needed. The cost is between $800 to $1500.

Passive Subslab Depressurization (PSD) uses natural pressure differentials and convection to draw air up a vent pipe. New construction homes in Montgomery, Howard, Frederick, Calvert, Washington, Carroll, and Baltimore Counties have PSD systems installed. These systems are ready to install a fan, if needed, to convert to an Active System, ASD.

Block-wall Suction can be used in basement homes with hollow block foundation walls. This method removes radon and depressurizes the block wall, similar to sub-slab suction.

As always, use a licensed, qualified inspector.

 

Thanks for an informative guest post:

David Goldberg   –   Home Inspector                                                                         phone: 301-913-9213 fax: 301-774-4554

Reliable Home Services, Inc.

ASHI Member #101584  MD License #29322

Reliable Home Services is a qualified Radon Tester

Home Shopping: The Square Footage Dilemma

Home Shopping:  The Square Footage Dilemma

I like to watch several series on HGTV. “House Hunters” is one of them. I like to see the different home values in different locations across the country. One of the things that always makes me scratch my head, though, is when they use the price-per-square-foot calculation.

 

In the real world of real estate, no one really does that, at least not when it comes to market value and what buyers will and have been paying for a home. Builders use price-per-square-foot calculations for their own purposes, and commercial real estate uses that statistic to price out properties for rent.

 

When referring to residential real estate, comparing home values from one home to another is rarely ever an apples-to-apples comparison. Determining the market value of a home is a multi-faceted process. There are several reasons…

  • First of all, a home with lots of high-end upgrades is going to command a higher selling price than a similar sized home with basic features. Buyers just aren’t going to pay the same amount for a house that doesn’t have the custom features or upgrades compared to a similar sized home with all the bells and whistles.
  • Another reason is that square footage doesn’t always mean that you have that amount of actual floor space. Take for instance, a two-story Colonial =>
    traditional Colonial square footage
    Traditional 2-story Colonial

    To calculate square footage, you take the dimensions of the first floor, and double that amount for the square footage. This traditional Colonial home has about 2000 square feet, 1000 on each level.

    Now consider a contemporary 2-story house of 2000 square feet…If it has a 2-story foyer or a 2-story great room, like the picture below, it still may have the same 1000 square-foot footprint, the same square footage as the Colonial without the 2 story rooms. The two don’t completely compare.

    square footageYou might pay more for the dramatic 2-story rooms than you would for the basic home, depending on the market, even though the basic home had more actual floor space.

    This is like comparing apples to oranges.

  • A third reason why we shouldn’t rely on the square footage statistic is that it doesn’t take take location into account. Remember that overused cliche: location, location, location. The values in one neighborhood can be driven by completely different metrics than a neighborhood across town, even if the homes are similar. The age of the home, the amenities that the particular builder added and the difference in construction make a difference. The neighborhood amenities and demand also greatly affect the values.
  • The last flaw you find when relying on the square foot measurement in direct comparisons is that we often find the tax record is wrong. The tax record doesn’t always reflect any renovations done on the home after the initial sale. And sometimes, its just wrong for no reason at all…garbage in/garbage out.

Additional Reading:

Buyer Beware

Because mistakes are made, and human error is always a possibility, buyers should always make it their responsibility to check the square footage of a home they are interested in purchasing, and not rely on the owner, the agent, or even the State tax record.check the square footage

There are several apps available to serve the purpose, why not do your own quick measurements yourself?

  • Stanley Floor Plan App – It creates a floor plan from your picture. How easy is that? Android and ios
  • Add to that Stanley Smart Measure Pro App – Take a picture, then measure on the photo. Android and ios
  • There are several apps for professionals that use a laser measure in conjunction with a calculator to measure for flooring, paint, and to create floor plans for designers.

Count on Your Agent’s CMA – Comparative Market Analysis

Your listing agent or buyer’s agent will be able to do a custom CMA, by carefully studying comparable homes that have recently sold and that are currently on the market. This is the best way to determine fair market value. After that, if the home is being financed, the bank will require an appraisal, which will be the deciding factor in the value of the home.

 

An experienced agent will do a custom CMA, taking into account all of the various market factors, unique features and neighborhood nuances. No other valuation can compare for an accurate measure of what a home is worth in the present market.

Additional Reading:


 

If you’re considering selling your Frederick Md Home, contact the Highland Group regarding our High-Tech, High-Touch Listing Plan. 301-401-5119

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Buyer Question: Do I Need to Get Title Insurance?

Buyer Question: Do I Need to Get Title Insurance?

What is Title Insurance?

Owner’s title insurance is purchased when you buy a home, and it protects your right to your home for as long as you or your heirs own your property. It protects the homeowner, and the lender, after settlement from any losses that may result from issues or title defects that were unknown before they purchased the home. Many buyers ask, do I need to get title insurance?

Without title insurance buyers would have no way of knowing if the seller’s actions may have caused future problems for the next homeowner. For example, the seller may have:

  • avoided disclosure of using the property as collateral for an unpaid loan
  • frauduelently claimed to be the sole owner
  • failed to pay real estate taxes
  • even a simple mistake in the recording of legal documents

Owner’s Title Insurance Protects Your Rights

If ownership of the property is ever challenged, the insurer defends your possession of the property. If a challenge to your property title is ever legitimate the insurer will pay for your losses, as your title insurance policy specifies.

  • It protects you against false title claims by previous owners or lien holders.
  • It protects you as long as you have an interest in the property.
  • It insures against events that occured before the policy is issued, unlike other forms of insurance.

How Title Insurance Works

title insurance research
Searching the public records is a lot of work, since only about 15% of public records have been digitized.

As property changes hands, mistakes and irregularities can place your ownership of the home in dispute. The mistakes are often made long before you made the purchase.

The title company searches the public records for documents associated with the property and provides the buyer with an expert, interpretive view of the impact of all recorded matters on the property’s title. If the search reveals recorded defects, liens or encumbrances on the title, such as unpaid taxes, unsatisfied morgages, easements, or restrictions, etc., these are reported prior to purchase, and solutions are put in place to resolve the impediments.

Even when the title search is extensive, problems can still arise after the home is purchased. This is when title insurance prtects the new owner from hidden defects, and protects the owners interest in the property.

29 Issues Where Title Insurance Saved the Day

Owner’s title insurance protects you as well as your heirs from financial loss caused by title trouble. Compared to the damage any of these troubles can cause, the one-time premium is small. Here are 29 title troubles that really do occur:

  1. False impersonation of the true owner of the land
  2. Forged deeds, releases, etc.
  3. Instruments executed under fabricated or expired power of attorney.
  4. Deeds delivered after the death of the grantor or gratee, or without the consent of the grantor.
  5. Deeds to or from defunct corporations.
  6. Undisclosed or missing heirs.
  7. Misinterpretation of wills.
  8. Deeds by peoplee of unsound mind, or by minors, or by aliens.
  9. Deeds by people secretly married.
  10. Birth or adoption of children after the date of the will.
  11. Surviving children who were omitted from a will.
  12. Mistakes in recording legal documents. (human error, it happens)
  13. Errors in indexing.
  14. Falsification of records.
  15. Claims of creditors against property sold by heirs or devisees.
  16. Deed in lieu of foreclosure given under duress.
  17. Easements by prescription not discovered by a survey.
  18. Deed of community property recited to be separate property.
  19. Errors in tax records. (for example, listing a payment against the wrong property)
  20. Deed from a bigamous couple.
  21. Defective acknowledgements.
  22. Federal condemnation without filing of notice.
  23. Descriptions apparently, but not actually, adequate.
  24. Corporation franchise taxes, a lien on all corporate assets.
  25. Erroneous reports furnished by tax officials.
  26. Administration of estates of persons absent but not deceased.
  27. Undisclosed divorce of spouse who conveys as the heir.
  28. Marital rights of spouse purportedly, but not legally divorced.
  29. Duress in execution of intruments.

The Cost of Title Insurance

Many home buyers question whether the purchase of title insurance is really worth the cost. The costs and details of who pays for the owner’s title insurance policy differs from state to state, depending on state laws, local customs and agreements made in the real estate contract.

the cost of title insuranceThere are title insurance calculators on most title company websites; you can get a rough estimate of what title insurance costs will be. To get a general idea, as a very rough estimate, for a home in Frederick Md with the average price of $300,000, basic title insurance will be in the neighborhood of $1400 to $1600, depending on details. An enhanced title ensurance package will be About 10% more. [these are not quotes, but rough estimates]

Even when the title company does a careful search of the public records, title troubles which weren’t disclosed, or mistakes in public records – called hidden hazards – are all possible. Even if your abstract is perfect, your title could be worthless because of any and more of these common issues. Your title attorney’s examination may be the absolute best, but your title may still be fatally flawed. The best remedy is title insurance.


 

Thanks to Salisbury, McLister and Foley, LLP for the information above. We’ve been happy to refer Pat McLister for 24 years, and are never disappointed in the settlement company’s service. They’ve never been late, and always go a step above to provide our clients steller service.

Contact Chris Highland for Buyer Representation in Central Maryland. 301-401-5119. Search for Homes in Central Maryland.

Relocating to Frederick in 6 Months, Have A Plan

Relocating to Frederick in 6 Months, Have A Plan

If you’re relocating to Frederick Maryland within a few months, you’ll need a plan. Most likely, you’re looking on the real estate websites to see what the market is like, what the neighborhoods and communities have to offer.

Information Tip: Our website, YouTube Channel and community blog, 365 Frederick, are great virtual resources. No doubt, you’ll be planning a trip to the area to check it out.

imageWe recently had the pleasure of assisting an armed services family to relocate from Pennsylvania to Frederick. As is often the case in the military, one spouse came to scout out the area. The husband was still in Afghanistan, and the wife found the home. From their internet search, to the closing, it took about 5 months.

Relocating to Frederick in 6 Months, Have A Plan

The first step you’ll take is to connect with an experienced local agent. You’d be amazed how a phone call can help you connect and establish a good rapport. We can learn a lot about you and what type of home you’re looking for, including your family’s needs and wants in the initial conversation.Frederick Md Living

In that first converstion, we can refer you to a reputable local lender who will have the loan product that will best meet your needs, whether it’s a VA loan, FHA, or Conventional. We also have lenders who provide USDA loans, FHA 203K loans for fixer-uppers, or any other product you need. You’ll want to know how much you can afford and what your estimated monthly payments might be before you start looking in earnest.

Home Search Tip: Megan found that our mobile app, HomeSnap, Frederick homes for salewas a super tool to use. She found it easy to use and more accurate than many other mobile apps. While we were home shopping, she was snapping from the passenger seat as we drove through neighborhoods, getting information on the spot!

Our desktop home search site is also a great tool. It works beautifully on a mobile phone or tablet as well. To search for homes remotely, you can set up any number of personalized searches with many different parameters, including price points, number of rooms, neighborhoods, zip codes, cities, subdivisions, and a lot more.

Planning Your Visit

Secondly, it would be helpful for you to start to plan the agenda for that first actual trip to the Frederick area. You may want to visit for a day or a weekend before you start looking for a home in earnest, to familiarize yourself with the community. When you’re shopping for a home, we realize that you’re shopping for a lifestyle as much as you are bricks and sticks. You’ll need to see firsthand the neighborhoods, the amenities, schools, shopping, parks and entertainment, etc.

Frederick Historic DistrictOnce you start shopping for a home with us, you’ll want to visit about 3 to 4 months before D-day, at the latest. You’ll need a minimum of 30 days to find a home…in our experience, it usually takes about that long. Once you found it, about 60 days to settle and move. As of October 3, the new Closing Disclosure laws will extend the time from contract to close from one to three weeks, depending on the details of the transaction. If you visit too far away from your move, in this present seller’s market, nothing you see will be available when you are ready to purchase.

While you will find a lot of useful information available on the internet, there’s nothing like seeing the neighborhoods and local life in person. An experienced local agent can narrow down the search time for you. By carefully listening to your needs, wants and interests, we know the local neighborhoods after selling real estate in central Maryland for 23+ years, and we can provide you with the information you need to make your best decision.

 

When we take someone on a tour of Frederick County, we do what we like toHomes for sale Frederick County call “the four corners tour“. We show people the lay of the land in the county, talk about the schools and types of neighborhoods and home styles, and we show how people get around for work and shopping. All the while, we’re listening to what you’re looking for. We’ve been enjoying life in Frederick County for 25 years and have raised our 4 children here, as well as some fur kids along the way!

Diligence with the Paperwork

Depending on the market we’re currently experiencing, a buyer’s strategy will vary. If it’s a seller’s market, you’ll want to be ready to make an offer quickly, depending on the demand for the type of home and the neighborhood. During your preparation, you’ll want to get all the necessary paperwork to your lender as soon as you can. The process of loan application and qualification has gotten more complicated and lengthy in the recent years.

When you find your dream home, if you’ve taken the step of getting qualified for the loan, you’ll be in a much stronger negotiating position. The difference between being pre-qualified and actually being qualified can make your offer much more attractive in a multiple-offer scenario.

The Best Strategy Wins

Having a strategy is an important part of making an offer. Having an agent who is a trusted adviser is the first step in a winning strategy. A skilled negotiator with a thorough knowledge of how to best approach sellers in various situations will be an advantage. An experienced, skilled agent can help you get the home that is right for you, at a price and at terms that are a good value for the market.

Additional Resources:

                                                              *                     *                     *

If you’re relocating to Frederick or Central Maryland in 6 months, have a plan! Call or email for superior relocation service. We’ve got a great list of preferred local lenders, and use our free MLS property search, both mobile app and home search. Chris Highland: call/text 301-401-5119. Chris@ChrisHighland.com.

Buyer Questions: Should I Get A Home Inspection?

Buyer Questions: Should I Get A Home Inspection?

Should I Get A Home Inspection?

The question of whether to get a home inspection or not pops up regularly in conversations about real estate. Rewind the RE memory a decade ago, when the market was hot; buyers dared not ask for a home inspection. When they were in competition with 5 other offers, they had better offer more than the list price, and forego as many contingencies as they could feel comfortable with. In some markets today, the same conditions are causing buyers to ask the question again: Should I get a home inspection?should i get a home inspection?

A home inspection is your right, and is almost always a good idea, even in new construction. Most real estate agents will encourage buyers to get a home inspection. Let me relay a couple of stories to illustrate why:

A.   Falling Skies

The buyer’s had ratified an offer on a newly constructed townhouse, with the help of a buyer’s agent. Fortunately the buyer’s listened to the agent’s advice and had a home inspection contingency written in the offer. The afternoon of the inspection, the buyers were sitting in the living room with the inspector as he was finishing up with the last details of the report.   They were jolted out of their metal folding chairs with the sound of a series of loud crashes and clangs  from the garage. They all rushed into the garage to see the jacuzzi tub from the master bath sitting amongst the wet drywall rubble.   With mouths gaping open, they raised their wondering gaze to the huge hole in the ceiling.home inspection

As it turned out, the plumber had neglected to attach the drainage pipe from the tub to the main in the wall. When the inspector filled the tub, then unplugged it, all that water drained into the floor and drywall. One hour later, the floor gave way. Who would have suspected it in a brand new house? There is always the possibility of Human Error.

B.  Fixing the Fix of the Fix

I recently spent 2 hours with a first-time buyer and a home inspector in an historic home, one of my favorite inspection opportunities…I learn so much. The home had over  $50,000 in renovations, all beautifully done. When examining the electric system, we discovered, because a series of fixes had been done by different electricians over the years, that the electrical wiring do i need a home inspectionwasn’t even grounded. Keep in mind, all the electrical work was done by a licensed contractor. He had just missed the fix of a previous fix which altered what had originally been a grounding line. Who would have suspected a licensed electrician would have missed it? Again, Human Error.

The cost of a home inspection can be anywhere between $400 and $500 on the average house. It is so worth it when you find something major. If you discover something that you just can’t live with, ie. a cracked foundation, the inspection is the contingency that gets you out of having to buy the home…off the hook, and gets your deposit back. If you still want the house, the inspection is the contingency that you can use to get the seller to address it.

It’s Just Good To Know

I would also argue that it’s worth it even when you don’t find something major. It is worth the peace of mind. It is worth having a licensed professional going over your future home with a fine-toothed comb, teaching you all about the inward workings of your number one investment. Understanding the systems and physical aspects of your home is important for a homeowner. At the very least, you’ll get an idea of what will need future expenditures.

The home inspection is your safety net. If at all possible, write that contingency in to the purchase offer. At worst, you’ll give yourself an out. At best, you’ll give yourself peace of mind.

Don’t Just Take My Word For It…

  • In his article Tips for Buying A New Construction Home, Cincinatti real estate agent Paul Sian gives an excellent tip to new home buyers:  “Many builders will give a one year warranty on new construction homes, so it is a good idea during the 11th month after moving into your new home to have a home inspector come out and look over the home again.” If the home inspection reveals anything that needs attention, it will most likely be under the builder’s warranty.
  • In this Realtor.com article, Seven Things Your Home Inspector Wishes You Knew, author Jamie Wiebe wisely points out to buyers that anything can be fixed. Some things sound scary, especially after so many news reports, but there is a solution for every problem. All can be negotiated after the home inspection report, if that’s what a buyer chooses. The only issue that might be worth stressing about is a water issue, and the only stress should be that the issue is dealt with before settling on the house..
    .
  • Bill Gassett, Metrowest Mass real estate agent, gives some sound advice that I heartily agree with: “…the purpose of the home inspection contingency is not to get a better price on a home because of minor issues found during the home inspection…this is one of the biggest things a buyer can do that real estate agents hate” (btw, sellers don’t like it much either). Depending on the type of financing and terms of the contract, major deficiencies found during the home inspection may be used as a reason for a reduction in the price or a concession from the seller towards closing costs, if the buyer decides that course of action. Be sure to check out Bill’s extensive article: How to Negotiate a Home Inspection.
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  • Seven Important Things to Look for When Viewing a Home is a great resource for home buyers. Kyle Hiscock, Rochester Real Estate Agent, lists the seven most costly system fixes in a home, the items that buyers need to watch out for when they are considering a home for purchase.
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  • And finally, here is some Real Home Inspection Advice from a Real Home Inspector. Mike Chamberlain, owner of MC2 Home Inspections LLC, explains in great detail what a home inspector is ACTUALLY required to do during a home inspection. This is according to the standards of practice from the largest home inspection organization in the world, InterNACHI (International Association of Certified Home Inspectors). This will be an excellent resource if you’re a buyer asking the question, Should I Get A Home Inspection?

home inspectionIf you’re in the market, give us a call to get buyer representation and sound advice about today’s Central Maryland real estate market. Feel free to contact us for our pick of superior local home inspectors.

Chris Highland – 301-401-5119. Chris@ChrisHighland.com

Five Mortgage Mishaps to Avoid

Five Mortgage Mishaps to Avoid

The mortgage industry has become a little more tricky to navigate in the recent years, but getting qualified and getting the loan is still attainable… just don’t make these rookie mistakes before or during the loan process:

5 Mortgage Mishaps…to Avoid

1. I have always paid cash for everything, so I don’t have any late payments. I should be good credit-wise, right?

Usually, your credit history is the most important factor in a mortgage qualification process. If you don’t have any credit, you may find it difficult to qualify; you have to have some credit to have a credit history. You have to get credit, even if it starts with a secured or high interest rate card, and make the payments on time.

If you have no credit, it may take a year or two to establish credit. If you check your credit and find that your credit score is under 640, you will want to take some steps to increase your credit score. Aiming for a score over 700 is a good strategy. The higher the credit score, the lower the interest rate…the lower the monthly payment.

2. I have been able to get credit whenever I apply, so I don’t need to check my credit report, do I?

A mortgage is different from other types of credit, especially when lenders are being more picky than they used to. You should check your report in advance of applying for a mortgage to make sure there are no errors.

You need to check all three reporting agencies, Equifax, Experian and TransUnion, to see if there are any omissions or inaccuracies, check to see if balances were cleared after pay-off, and if there has been any fraud.Frederick Real Estate

You are entitled to a free report from each agency every 12 months, go to   www.annualcreditreport.com.

3. I need to raise my credit score, so I’m going to close some credit lines.

No! Don’t do it! I will most likely hurt, not help. Part of your score is based on your history, in which case the longer the better. Part of your score is based on the ratio of credit available to credit used, so if you close some of your credit lines, you inadvertently lower your ratio, which will hurt your score. If you feel you have too many credit cards, you can close some of them after you settle on your home.

4. Our mortgage has been approved, but we haven’t closed yet. We can go ahead with plans to buy new furniture and a car, right?

You don’t want to do that yet. The lender will run your credit one last time right before settlement, and this new spending will more than likely lower your credit score… best to wait until after settlement.

5. I just got offered a new job closer to our new house!

Again, wait until after you settle on your new house. Lenders double-check loan applications right before settlement to verify that you are still employed at the job on your application. Best to wait until after closing. Then you can move, buy, get that new job… just be sure to pay that new mortgage every month on time!

What Kind of Real Estate Market Do We See in Frederick in 2015?

What Kind of Real Estate Market Do We See in Frederick in 2015?

Sometimes, we need to look at the market from a historical perspective in order to understand where we really are today.  Real Estate markets are constantly changing, prices and trends can be, and often are, different that they were as little as 3 to 6 months ago.  But overall, we usually find ourselves in either a buyers’ market, or a sellers’ market, and of course, that tricky “transitional” market between.

The basics of markets have everything to do with supply and demand. And what’s true in one market is not necessarily true in another market. Remember: All Real Estate Is Local…so buyers and sellers need to rely on a local market expert, rather than national news, to get the real story.

Let’s look at the Frederick real estate market and the recent history:

We’ve just come through what many called a buyer’s market. From 2007-ish through 2012-ish we had a large inventory (as high as 2400 homes on the market – a normal market is 1200) with little demand. We saw values declining as much as 40% from the high of 2006.

Further Back…

It was a hot sellers market between 2000 and 2005, with many more buyers than there were listings, and with an average of 400 listings at any given time.  We had multiple offers on most listings; buyers had to offer more than list price, and forego home inspections sometimes to win the listing. Values were increasing at 20% a year, year-over-year, mostly due to the low interest rates and ease of financing, and simply, the high demand.

Additional Reading:  What We’ve Learned from A Decade of Real Estate Woes, by Anita Clark, Warner-Robbins Georgia Realtor …or… What Wikipedia Cannot Tell You About Real Estate!

inventory and price

Dramatic Changes

The market from December 2005 to today has seen dramatic changes, with lots of transistions between a buyer’s market and a seller’s market. The lending industry has been in transition as well, with the sometimes drastic tightening of lending standards, and with new lending programs coming and going.

Additional Reading: Is It a Buyer’s Market or a Seller’s Market?  And what difference does it make? It makes all the difference to your buying or selling strategy.

Fast Forward to 2015

We are now in what many are calling a sellers’ market.  With an inventory of 1200 homes on the market in Frederick County, what we would consider a normal number, the increase in demand makes it a tight inventory. Add to that the fact that the majority of homes on the market are not “move-in-ready”…they require a little elbow grease or TLC. Today’s buyers find that they have fewer homes to choose from, and they are facing competing offers on the best homes.

With interest rates still at historical lows, buyers can expect competition.  As long as they have good credit scores, the downpayment required for their loan program, and are ready to act when they see the house they like, they should have success. A competitive market is not the time to linger over decisions. 

For Further Reading: 7 Tips to Help a Home Buyer Win in a Multiple Offer Situation, by Kyle Hiscock, Rochester NY Realtor

Buyers: Get Preapproved

When the competition is high, it’s a good idea to go ahead and get pre-How much house can I afford?approved by a local lender, rather than just get a pre-qualification letter. The difference is that you’ve been through the approval process before you put an offer on a home. It takes a little paperwork upfront, but it can be worth it when you are in a competing offer situation and you are already approved, vs. the other guy who just has a pre-qualification letter. You will already look like more of a sure thing.

For Further Reading: The Difference Between Pre-Qualification and Pre-Approval, by Bill Gassett, Metrowest Massachussetts Realtor.

Credit Scores Still Count

As lending has tightened up over the last decade, it’s still important to monitor your credit score. The better the credit score, the better your interest rate. There are loan programs for those with lower credit scores, yes, but the higher you can get your score, the better for you in the long run.

So, as in the days of old, (before 2000), we all need to keep vigilant about our credit scores, clean up our tarnished credit, and keep our good scores good. Common sense lending practices are in effect, with more lending programs opening up for today’s buyers.

As usual, we recommend using a local lender. Having a relationship with local lenders gives us accountability and helps us help our buyers. We like the 36″ rule…keep our lender close enough to reach out and strangle them if the loan process breaks down! Contact the Highland Group for referrals on a great local lender, and for a personal tour of Frederick Homes for sale.

What About Your Market? Are you seeing a hot 2015 market … or a simmering summer?

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Frederick Real Estate Online Further Reading :

Understanding Your Credit Score

Video: Eight Credit Score Myths

What Can I do to Improve My Credit Score?

The Highland Group
Chris & Karen Highland  cell — 301-401-5119
eXp Realty – 410-777-5714
email us: chris@chrishighland.com