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Category Archives: First Time Buyer

What is the Difference Between FHA and Conventional Loans?

What is the Difference Between FHA and Conventional Loans?

What is the Difference Between FHA and Conventional Financing?

For first time home buyers the terminology of loans can be confusing, and sometimes the answers are misunderstood when explained in real estate jargon. The three basic categories of financing are either FHA, VA, or Conventional. Here’s a brief rundown:

1. FHA – Insured Financing. 

FHA stands for Federal Housing Administration and was created in 1934. The Federal Housing Administration doesn’t actually lend FHA Loansmoney to home buyers. Rather, it insures the loans that are given to qualified home buyers, by FHA-approved lenders. FHA loans are a type of government assistance and have lending standards that are less stringent than other types of loans.

The minimum credit score of 580 is a bit lower than that required by lenders of conventional loans. [And 580 is just the FHA’s guideline – individual banks and mortgage lenders still need to agree to offer such loans. So there’s a very good chance you’ll need an even higher credit score.]

Also, the credit score isn’t the only aspect of the buyer’s credit-worthiness; FHA takes into consideration the buyer’s payment history, and what they refer to as common sense lending standards. If you have had credit problems in the past, the FHA recommends a Consumer Credit Counseling program to avoid being denied an FHA loan.

The downpayment required on an FHA loan is 3.5%, this is less than conventional loans. The maximum seller contribution allowed is 6%.

Historically, FHA-insured loans have made it possible for lower income Americans to purchase a home that they otherwise wouldn’t have been able to afford. FHA loans are the most popular choice of first-time home buyers, mainly because they often don’t have the money for a higher downpayment. They also don’t have the mortgage history which so often helps in building a higher credit score.

In today’s real estate market, with historically low interests rates that are poised to go up as the economy recovers, many first time buyers are opting for FHA loans with lower down-payments. Rather than waiting to save enough for a 20% downpayment that is necessary for many conventional loans, taking advantage of an FHA loan at today’s interest rates is a smart move. In the time that it would take to save that amount, interest rates will very likely rise and mitigate against the monthly savings from a higher down-payment.

FHA loans require private mortgage insurance to protect lenders from possible default. Every month, a mortgage insurance premium, MIP is added to the monthly payment. This mortgage insurance was just lowered in 2015  from 1.35% of the premium amount, to .85%. This will save an average of $900 a year.

The other change that just took place is that the MIP is now a permanent part of the loan. Previously, the MIP was dropped from the monthly payment when the loan was paid down to the point where the buyer owed less than 78% of the original loan. The UPMIP (upfront MIP) is currently at 1.75% of the base loan amount.

FHA has loan limits, which are different, based on local markets. In Maryland: in Montgomery and Frederick Counties, the limits is $625,500, while in Howard and Carroll Counties, the limit is $517,500, and in Washington County the limit is $271,050, for a single dwelling.

More information: FHA Connection

2. VA Loans – Loans for Veterans.

Since 1944, introduced in the GI Bill of Rights, the Housing Administration has been providing VA guaranteed loans for our Veterans. Like FHA loans, VA loans are made through approved private lenders. The guaranty to lenders means thatFHA or VA or Conventional loans in both VA and FHA loans, the lenders are protected against loss in case of the default of the buyer.

VA loans are the only loans today which offer a no-down payment loan, no MIP, and often have a lower interest rate. VA loans require no private mortgage insurance, and allow financing up to 103.3% of the value of the home.

The VA does not have a minimum credit score used for pre-qualifying for a mortgage loan, however, most Lenders require a minimum credit score of at least 620.


The maximum amount of a VA home loan is typically $417,000, although it can be higher in certain “high-cost” counties. In Hawaii and Alaska, for instance, the limit is $625,500.

Both VA and FHA have their own guidelines which describe all allowable loan traits, as well as the going terms of an Federal Housing Administration-backed loan. The rules can differ regarding closing cost help, property condition, and type of property that can be financed, as well as other items.

3. Conventional Loans.

Conventional loan products are not guaranteed by the VA or insured by the FHA. A non-GSE loan, non-government sponsored entity. Private, conventional loans are secured by investors. Thus, the requirements are often more stringent than FHA or VA loans.

Unlike FHA loans, conventional loans can be used for second homes and investment properties. The minimum credit score is typically 620.

historic mortgage ratesConventional loans have various terms and loan-to-value ratios. Loan-to-value ratio (LTV) means  how much you are borrowing compared to the overall value of the home. The more you put down, the lower the LTV. The higher the LTV, the more risk the lender is taking, and the more costly the loan for the buyer, in terms of interest rate.

The down-payment required on a conventional loan can vary. The Conventional 97 program only requires 3% down, and is available to U.S. homebuyers through Fannie Mae and Freddie Mac. Conventional loans can cover much higher loan amounts than FHA, called Jumbo loans, and offer more types of loans.

If the LTV is lower than 80%, the lender often requires that borrowers pay for private mortgage insurance, or PMI. The PMI is only a single premium, whereas with FHA, there are both upfront and monthly premiums, and the PMI with FHA loans never drops off. The term of the loan can be longer or shorter, 15 years, or 30 years or even 20 or 40. With each there are different interest rates.

Ask Your Lender

Your lender can help you determine which loan product is best for your needs. Your loan officer will be able to tell if you qualify for both types of loans, and determine which will cost less both short and long-term.  Ask for a side-by-side cost analysis.

Contact us for our list of preferred lenders in Central Maryland.

Home Ownership is Key to Wealth Building

Home Ownership is Key to Wealth Building

Home Ownership in America

It has been an established financial principle that home ownership is a key to wealth building. While the economy is in recovery and the housing industry is poised for a comeback, it is a good time to reevaluate whether home ownership is the right choice for those who have been on the fence.

The Joint Study for the Nation’s Housing of Harvard University is an institution that studies and reports on housing’s critical role in the American economy and in communities. Here are some key points from the most recent study of housing in 2014.

A Home of One’s Own

Owning a “place of one’s own” has long been integral to the American Dream. Among every demographic today, home ownership is a desirable path for the majority of people. When most of us investigate the potential of buying a home, we have intrinsic, esoteric reasons, and we have analytically calculated reasons. We use both sides of our brains to make housing decisions.

What Americans Think About Buying A Home

The Case-Shiller Report of Home Affordability shows that in 2015 it is cheaper to buy than to rent in 94 of the 100 metropolitan areas in the country. Add to that the fact that rents have increased over the last few years, and are projected to increase another 3.3% throughout 2015. Rents are increasing more than home values.

Historically low interest rates combined with reasonable home values has maintained the affordability of real estate. While home values have increased by 3.7% nationally over last year, these values will only continue to increase. Buying a home will be a better option for those who are capable.

Home appreciation is happening in most areas of the country, at a pace that is normal and healthy, and also at a pace that is higher than wage growth in 76% of the U.S. As economic conditions improve, more Americans have job stability and savings to seriously consider home ownership.

What Americans Feel About Home Ownership

The Harvard housing study reveals the top five reasons why home ownership is a value to Americans.

  • Home is a place to raise children and provide a good education.
  • Home is a place of safety.
  • Owning a home provides more space for your family.
  • Owning a home provides control over your own living space.
  • Home ownership is a good way to build wealth to pass on to your family.

Wealth-building is a value that crosses from right-brain to left-brain very easily. Having wealth to pass on to family makes sense to both the rational mind and the heart. The number one way to build wealth for most Americans is home ownership.

Case Study: My Parents

When my dad retired from the Navy, my parents bought a 2.5 acre parcel in a small town in Florida. They built a house, then subdivided the lot, then built another house. They sold the first house. Then they sold the 2nd house, bought a fixer-upper (for cash) and moved into it, and fixed it up. Two years later, they sold that house for double what they paid for it. (it was 2006, the top of the market…what excellent timing!) They bought a home that my mother now lives in, and all along the way invested extra money in stocks. (the stocks haven’t done very well…the real estate did.)

All of this took place over 45 years, of course, but that’s what real estate is…a long-term wealth-building asset. It’s not an ATM, to be refinanced at every opportunity.

If you’re ready to make the step to home ownership, give us a call, we can help you through the process.

Chris Highland, 301-401-5119. Or Contact Us Here.


Buyers: It Helps to Get Inside the Home Seller’s Head

Buyers: It Helps to Get Inside the Home Seller’s Head

Understanding what is going on inside the mind of the home seller will be an advantage to a buyer. Ok, maybe it sounds like a Sci-Fi plot, but it’s not. One of the misconceptions new buyers have is that negotiating a home sale is all about the price.  While it certainly is the main concern for both parties, there are other considerations that influence a home seller’s acceptance of an offer.

Understanding the Home Seller

Understanding and using some of these other factors, or a combination of them, to your advantage, may be the secret to winning out over other buyers:

Other Factors:Negotiating Issues for Home buying

Deposit:  The Deposit is necessary to have a completed, legal contract in Maryland.  The amount is negotiable, but generally, the higher the amount, the better the buyer appears to a seller.  In a day when financing has tightened, and sometimes deals fail because a buyer ends up unable to get their financing in the end, a higher deposit amount can signify to a seller that this is a buyer who is more likely to be qualified.

Closing Date: There are many reasons to sell. Sometimes the sellers have moved already for a job, or maybe they have found their next home and want to settle as quickly as possible. By offering a closing date that is as soon as possible, a buyer can receive a more favorable response from the seller.

On the other hand, if the seller lives in the home and has to find his next home purchase, the buyer will want to give the seller enough time to find another home. Being flexible about the date is to a buyer’s advantage. Either way, a skilled buyer’s agent can help you craft the right offer for any situation.

Financing: The buyer’s financing is something the seller is going to be very concerned about.  When you present an offer, you must have a pre-qualification Frederick Real Estate Agents letter with it.  Make sure your pre-qualification is with a strong local lender. This speaks well of your ability to perform on a contract to buy the home.  Stay away from internet lenders!

Even better is the “pre-approval letter”. Taking the time to go through the approval process before you even contract on a home is always advisable if you can do it. The approval letter will trump the “pre-qualification” letter most days.

Contingencies:  Generally, in a seller’s market, the more contingencies loaded into an offer, the lower the chances of acceptance. In a market with low inventory and healthy demand, buyers will be in competition. If you have a home on the market for sale, and you’re looking for your next home, it’s almost always best to have your home under contract and present a house-to-settle contingency, rather than a house-to-sell contingency. The timing can be unsettling, but if you can have a little faith, it’s often the best scenario.

Motivation: Sellers have all kinds of motives for placing their home on the market.  Although it would be a negligent listing agent that would spill the

mortgage shoppingbeans about their seller’s motives to everyone, sometimes a good Frederick buyer’s agent can get the scoop.

Sometimes, the motivation is obvious: If the seller has been on the market for 2 years, has burned through 3 agents, but has not lowered their price…chances are, they’re not very motivated. Sometimes sellers need to be “educated” by the market to come to realize the true market value of their home. Sometimes, they have their minds made up, and there is no chance of changing it.

If the seller is relocating, or under some other type of motivation, these are good things for a buyer’s agent to find out. Sometimes the stars align, most of the time real estate agents do their jobs and make the stars align!

Ability to Negotiate: Both buyers and sellers should be willing to negotiate and should come to the transaction with a certain level of open-mindedness and flexibility. But sometimes we find that some people just aren’t very flexible. If you find a seller with this mindset, sometimes it signals a difficult transaction ahead. In this case, the buyer needs to decide how badly they want THAT house. If there are other contenders in the market, you might want to move on.

Likewise, if a seller doesn’t have much room to negotiate on price, as we often find in today’s market, then the buyer needs to understand that. This will help with establishing the right expectations from the start.

Negotiating 101

Negotiating on real estate turns out to be much more nuanced than agreeing on a price. There are contingencies, home inspections, financing, time-frames, and much more. Using an experienced Buyer’s Agent is the start to a successful real estate transaction for today’s buyers.

Related Articles:

Negotiating 101 for Home Buyers

Home Buying

The First Rule of Negotiating

Contact the Highland Group to learn more about Buyer Agency in Maryland, and put us to work. We’d love to help you make Frederick home.

When Right Brain and Left Brain Buy A Home Together

When Right Brain and Left Brain Buy A Home Together

The Right Brain and the Left Brain and Home Buying

The American Dream for the majority of people still includes home ownership, even after a decade of housing woes. Wanting to paint my walls the color of my choice, wanting a yard for my dog or kids, hanging my pictures on the nail in the wall, and wanting a place that I can call home… right brain, left brainall these sentiments that come from the left and right sides of the brain are the intangible values that move people to make what will most likely be the most complicated and expensive purchase of their lives.

The Right Brain Has Reasons to Purchase A Home

The right hemisphere of the human brain is the creative area of the brain. Creativity, imagination, intuition, art, music, feelings, visualization, daydreaming…all of these are governed by the right brain. Even as you read this, you may be imagining your home and surroundings. We are well acquainted with the feelings of “home”.

Owning your own home is still a part of the American Dream because most of us have warm feelings associated with “home”. We long for a place of our own to make our intrinsic dreams a reality. We want “all the feels”, and we want to create them like we want them.

The Left Brain Has Reasons to Purchase A Home

The reason usually kicks in somewhere in the process of deciding whether to buy a home instead of rent. This is for those of you who lean to the left brain for assurance:

It’s Cheaper to Buy Than to Rent

Nationally, it is 38% cheaper to buy than to rent. In all of the 100 major metropolitan areas it is cheaper to buy, according to the latest Trulia Rent Vs. Buy Survey. Interest rates have fallen and rents have risen over the last year.

rent v buy

Check out’s Rent Vs. Buy Calculator to see the details of your city.

Top 20 Most Affordable Cities – U.S. News. (Notice no Maryland city is among them.)

Frederick Maryland Rent vs. Buy

For the Frederick Maryland area, the numbers are fairly equal.  The median rent for a  townhouse in Frederick is $1200-1600**.  The median home value is $262,000, which computes to a monthly payment of $1243, at 4.25% interest rate, including taxes and mortgage insurance, assuming a minimum 3.5% down payment.  Add to this figure the tax exemption for home interest, roughly $200 a month.  Your monthly figure for buying is roughly $1250*. On a surface evaluation, renting and buying are very close.

*not a quote, just an estimate, using Bankrate’s Amortization Schedule Calculator

Assuming your rent will increase an average of 2.5% per year, a conservative figure, and assuming you own your home for 5 years, you will have saved $88,912 over the next 5 years by buying a home.

Looking at the Long Term Benefits

Breakdown of this Analysis:

Total rent over 5 years:  $96,230
– Total mortgage payments over 5 years: $74,617
Monthly payment savings over 5 years of $21,613

Add to that, 5 years of equity with a mortgage balance of $229,131:  $23,320

Add to that, 5 years of market appreciation of 2.5% (let’s be conservative.) $43,979

Grand Total saved buying vs. renting for 5 years:  $88,912

This calculation is why most of us believe in home ownership. It’s the single most likely way to build family wealth over a lifetime. Add to these calculations, the fact that you will be living in your own house, painting it your choice of colors, mowing your own grass, and all those other right-brained considerations, and you have many more intrinsic benefits.

With the 30-year mortgage, low interest rates, and common sense financing, average American’s have been building wealth for several generations, and most of us still want to partake of this particular aspect of the American Dream.

The Left Brain and Right Brain Working Together

We recently helped a friend buy her first home in Howard County. She is a space physicist. (now when I say jokingly, “It’s not rocket science!” I’ll have real context!) She makes a living, and functions most of her waking hours with her left brain. When we began the home buying process, we told her that she would make a decision emotionally…she was appalled! Never!

Well, like most of us, she started out with financial parameters, with a list of wants, needs and preferences, and even with a list of “no way’s!” When it came down to it, she chose the home that “felt” right. Then during the negotiations, she experienced a full range of emotions that she was not used to in her everyday life. the psychiatrist is IN

Many people would be surprised at the psychology that the typical Realtor gets to work through with buyers and sellers. Part of our job is to help people engage in negotiations and make decisions that will bring about their goals, and make a successful home purchase for all involved, no matter what their emotional state.

The best home sales are win-win in our opinion. All involved get what they most want.

The right brain and the left brain play a part in the home buying process. When these two hemispheres are aloud to do their part, and stick to their roles, most home buyers end up with the home of their dreams.

As with most major decisions, let your right brain and your left brain do their work. Your final decision is yours, and something you want to be happy with for the long run.

*         *         *         *

Chris Highland
eXp Realty
Frederick Maryland


* * It depends on the neighborhood. Always consult a financial adviser or lender in matters of your finances.

The Best of the Best Advice for First Time Home Buyers

The Best of the Best Advice for First Time Home Buyers

Best Tips for First Time Buyers

Home Buying Advice…

There is a plethora of advice for first-time home buyers on the internet, from friends and co-workers and from social spheres. Given that most first-time buyers are usually younger, they often have parents giving them advice as well.

With the abundance of advice available, it can be overwhelming. Sometimes the advice contradicts, it would seem. Different markets, different geographical areas, and different conditions make buying real estate a process that isn’t easily put into a box. (Nothing beats the advice of an experienced local real estate professional!)

However, we all encourage research, and many top agents are writing helpful content that provides a basic understanding for first time buyers. I’ve curated a list of more than 25 articles that are, in my opinion, the best advice from the top real estate bloggers that I know. Enjoy the reads and contact us, or any of these real estate professionals that might be in your area:

The Best Advice for First Time Home Buyers

More for First-Time Buyers:

As you research for tips and advice and learn about the process of homebuying, the most important thing will be to find a great real estate agent. Nothing can take the place of a personal conversation with a real estate professional. Learning about your particular situation in your local real estate market is essential.

For instance,
  • Are you in a buyers or sellers market? It makes a difference as to what you can expect when you find a home and start negotiating.
  • What are the home values in your area? Which way are values heading, up or down?
  • What is the best financing option for you? Which lender should you choose?
  • What areas of your city are the best for your needs?

Contact The Highland Group, for a meaningful conversation on buying your Frederick Md home. 301-401-5119

FHA Offers Discounted Loans to Homebuyers Taking A Class

FHA Offers Discounted Loans to Homebuyers Taking A Class

The Homeowners Armed with Knowledge Program

HAWK was announced by the FHA, Federal Housing Administration, this summer. The Homeowners Armed with Knowledge program is a series of housing counseling classes, with the intent of helping more first-time borrowers understand the issues of home ownership. The hope is that with more knowledge, fewer homeowners will default on their home loans.Mortgage Insurance Premiums

HAWK housing counseling and education covers how to evaluate housing affordability and mortgage alternatives, to better manage their finances, and to understand the rights and responsibilities of homeownership.

FHA Offers Discounted Loans to Homebuyers

After taking the classes, which are taken both before and after closing, mortgage insurance premiums will be cut for those borrowers. The average savings should amount to $325 a year, or almost $10,000 over the life of the 30-year loan. After two years with no delinquencies, homeowners can receive increased reductions on their mortgage insurance premiums.

There is a public comment period, which can be accessed at, along with more information about HAWK. The program should be in effect at the end of this year.

What is FHA Mortgage Insurance Premium?

While Fannie Mae and Freddie Mac actually buy mortgages, FHA does not. Rather, the Federal Housing Administration insures mortgages. It publishes guidelines for lenders. As they follow the guidelines, those loans qualify to be insured by FHA.

If an FHA insured loan is defaulted, the lender is repaid by FHA. This fund is primarily filled by Mortgage Insurance, charged to the borrower. There are two types of FHA mortgage insurance premiums:

  1. FHA Upfront Mortgage Insurance Premium (UFMIP). This is 1.75% of the loan and is added to the loan balance at settlement.
  2. FHA annual Mortgage Insurance Premium (MIP). This is a monthly installment added to your monthly mortgage payment. It varies depending on type of loan and the amount of your loan-to-value, LTV. If the loan-to-value on a 30-year loan is over 95%, the premium is 1.35%, if it’s under 95%, the premium is 1.30%.

You can see that the less money you put down, the higher risk you represent, and the higher the MIP that is charged.

By participating in the HAWK program, you get access to FHA MIP dicounts of 50 basis points off of UFMIP, and up to 25 basis points on annual MIP. This can add up over the years.

The value of the education for first-time home buyers is also a great benefit. Find out more at HUD’s website.

How Much House Can I Afford to Buy?

How Much House Can I Afford to Buy?

“How Much House Can I Afford?”

One of the first questions that a home buyer asks is, “How much house can I afford to buy?” It’s best if this important question is answered from the very beginning of the home buying process. That’s why we refer a home buyer to one of our preferred lenders before we even take them out to look at homes.

Knowing how much you can afford in a monthly payment is very important before you start looking. If you take the time to find out what your loan limits will be, you save yourself from several negative experiences:

  • Wasting time, looking in a price range that you won’t be able to afford.
  • Building up false expectations. It can be discouraging to paint a picture of your new life in a particular home or neighborhood, and then have it crushed by the reality that your dream is out of reach for now.
  • Falling in love with the wrong house. Let’s face it, buying a home is an emotional decision as well as a logical, rational one. It’s best to get all of the rational calculations and plans squared away before you let your emotions kick in to the decision. You do much better when you “fall in love” with a house that you can afford.

How Much House Can I Afford?The very best ratio, according to most lenders, to have is roughly one-fourth of your income gong towards house payments. Net, or take-home income. Anywhere between 25% and 32% is safe, but it’s good to start with conservative numbers. That way, if you start looking and find that you want to stretch yourself to a number above 25%, you can. If you start looking at the top of your range, you limit your upward movement. [Consult a Lender about “front-end and back-end ratios”…we can refer you to some excellent Frederick Lenders.]

Remember, getting a pre-qualification from a local lender is the only way to know for sure what loan amount you can qualify for. Doing your own calculations is only useful for getting a general estimation.

Learn more about “The Difference Between Pre-Approval and Pre-Qualification” from my fellow real estate blogger, Bill Gassett, Massachusetts Realtor.

Conservative or Not?

With a conservative 25% – 28% of your take-home income going towards your mortgage, you insulate yourself from emergencies. Even with the loss of one income, it is manageable to keep your home.

On the other hand, if you expect to have upward movement in your income, stretching yourself to your maximum loan limit is not necessarily a bad strategy. You may find that going the ultra-conservative route leaves you having to live in less than you really want. Either way, some buyers who make a hasty decision experience what we call Buyer’s Remorse.

For some great advice on “How to Avoid Buyer’s Remorse” read this article by my friend and fellow real estate agent in Las Vegas, Debbie Drummond.

Whether you make a conservative decision or not, having sound financial advice is our strong recommendation, whether through a certified financial adviser, or through the wisdom of friends or family.

*We are not financial advisers and don’t offer financial advice.

Ability Vs. Comfort

Something to consider, what you can afford to pay and what your are comfortable paying are two different things. Some good advice we’ve picked up in our journey: “practice living on the amount that is left after a mortgage payment for a while, to make sure you are comfortable.”

Remember that with a mortgage, you have a tax write off on the interest you pay, and that increases your actual monthly income. Or, you might think of it conversely, it decreases the amount you pay in taxes.

You should know your financial situation before you approach a lender and borrow accordingly. Chart out how high your payments would be at different rates by using our mortgage calculator, or any lender’s mortgage calculator. Once you know what you can afford to pay on the mortgage, you can get a rough estimate about your housing price.

Other Costs of Home Ownership

When you’re asking how much house can I afford to buy, Don’t forget to add in the how to determine list priceother costs of home ownership:

  • Homeowners insurance
  • Average repairs
  • HOA Fees
  • Taxes
  • Utilities

Having proper expectations set before you start your home search can make the process much more enjoyable, more manageable, and it can help keep your emotions in their proper place during the process. For extra reading and great advice:

Mark Brian, real estate agent in Anderson, South Carolina, has some great advice in his article: “Thinking About Buying a Home? Consider This Advice

Education is Power

At the Highland Group, we prefer to give as much information and education as a buyer can use, before, during and after the process of home buying. An educated consumer makes the best decisions and is a delight to work with. Please don’t hesitate to contact us for your own “personal home buyer’s seminar”…we’re delighted to help.

If you’re in the market for a home in Central Maryland, contact us for some great lenders. Contact Chris Highland,
Associate at eXp Realty,
Frederick Md. 410-777-5714,

The Home Buying Process

The Home Buying Process

The Home Buying Process

The typical journey of buying a home consists of several main processes. We like to say, “buying a home is not an event, it’s a process.” Although usually the home search is the fun part in many people’s minds, there are several steps that take place before and after the home tours. This infographic breaks down the eight basic steps in the process:

The Home Buyer’s Road Map

The Home Buying Process

The Home Buying Process

Buying a Home in Maryland: Nine basic Steps:

  1. Consult A Realtor – Starting your journey with a Realtor is a wise beginning. An experienced local Realtor not only knows the neighborhoods and values, but can bring together a team of real estate professionals that can give you expert service. Your real estate agent will help you find the lender and loan product that works for your specific needs. A real estate agent will have a team of inspectors, title attorney, and service specialists to make sure all the pieces of the puzzle are there.
  2. Pre-Qualification – With the recommendation of your Realtor, a credible, local lender will be your first stop on the road. Often with just a phone call, your lender can pre-qualify you for an amount that will guide you in your home search. Not knowing how much you can afford often leads buyers down an “imaginary road”, where they get their hopes set on something that they may not be able to afford, only to find disappointment.Equally important, the lender issues a Pre-Qualification Letter that is of utmost value when a buyer makes an offer. Without it, the sellers will not take the offer seriously.
  3. House Hunting – Your local real estate expert will be invaluable in helping you navigate the local neighborhoods. An experienced buyer’s agent can listen to your wants and needs, and guide you to the neighborhood and the home that is right for you.
  4. Making an Offer – A buyer’s agent will do an analysis of the current values, helping you know what the home is worth in the present market, with the level of interest and conditions. This will guide you to make an offer that will stand the best chance of acceptance, while keeping your best interests in mind. There are many parts to a good, strong offer:
    a. Market Value
    b. Contingencies – Financing, Home Inspection, Appraisal, Time frames… these are just a few.
    c. Time Frames
    d. Seller’s Motivations
    e. Loan Product
    f. Strategies – Many people don’t realize that there is a strategy involved in reaching a “win-win” in the home buying process.
  5. Negotiations
  6. Formal Loan Application
  7. Inspections, Possible Re-Negotiations
  8. Appraisal – “The Second Sale”
  9. Closing!  Your Realtor can help you coordinate the paperwork and all the moving parts of the transaction.

Most home buyers will purchase a home an average of one time every 7 to 10 years. Your local real estate agent helps buyers and sellers every day, 365 days a year, with hundreds of transactions accounted to their experience. Let that experience work for you as you embark on your home buyer’s journey!

Learn more about our Buyer’s Representation: 301-401-5119


Real Estate Terminology – DOM – Average Days on Market

Real Estate Terminology – DOM – Average Days on Market

Real Estate Terminology: DOM – Days on Market

Sometimes the terminology we use in the real estate industry can be so clear to agents, but not so meaningful to buyers and sellers. Let’s explain some real estate terminology, and why it is important to understand:  Days on Market, or DOM, for instance.

When a home sells, there are several statistics that are recorded, like the number of days that the home was on the market before it sold, or DOM. These numbers are all kept by the Multiple List Service (MLS) and we can see the average days that it took to sell a home in any number of categories, by neighborhood, by zip code or by city or county.

The real value comes in comparing these averages over time and over neighborhoods and areas. This average tells us how the market is doing in general. If it is taking 6 months to sell a home compared to 4 months at the same time a year ago, we can tell that the market has slowed down. If it takes 3 months to sell a home in one zip code or neighborhood, and it takes 6 months on average in the entire county, then we know that that neighborhood is in demand.

Knowing DOM Helps A Buyer

new homes frederick mdAs an example, If you see a particular home that has been on the market for 180 days, and the average DOM for the neighborhood is 88 days, that tells you that something is wrong… either the house is priced too high, or there is something wrong with the condition, or both. If you look closer and see that the home has not had a price reduction since being on the market, you might deduce (with some accuracy) that the seller is not realistic in their pricing. Likewise, when you see a home that has been on the market for 60 days and has had 3 price reductions, you can accurately guess that the seller is motivated. A motivated seller is much more likely to appreciate a fair offer than an unmotivated seller. The negotiation will stand a better chance, given there are no other surprises or issues.

As far as real estate terminology, days on market is a useful statistic. If correctly used, it can give you insight into the seller’s mindset, and help you develop your negotiation strategy. Or, it can clue you into the fact that you might just want to move on.

Knowing DOM Helps A Seller

You can see how a seller will be better able to have a good pricing strategy by knowing the average Days on Market in their neighborhood and in their price range. When a home sits on the market longer than the average number of days for comparative homes, it can hurt the marketing of the home. The home can become stagnate and develop a “stigma” in the eyes of potential buyers.

Buyers start to wonder, “what’s wrong with the house?” when they see that it has been on the market significantly longer than other comparable homes. Then they start to look for the problems.

As a seller, it behooves you to keep an eye on the average days on market of your comparables. These are markers of how your home is doing in a competitive framework.

Whether buying or selling a home, choose an experienced agent who knows the statistics and trends for your neighborhood and market. A real estate agent should be a trusted adviser, willing and patient to teach about real estate terminology: DOM – Days on Market, and to give expert advice about your strategy.