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Rent Vs. Buy 2018 – Explaining Housing Affordability

Rent Vs. Buy 2018 – Explaining Housing Affordability

🏘Explaining Housing Affordability

RENT VS BUY. Is 2018 your year to buy a home? We’ve spend 25 years helping people in Central Maryland answer that question. Usually, the answer is based both on math and economics, and on your personal situation. First, lets talk about the math…affordability. 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 surveys are released quarterly and take into account two things, income and housing. The survey covers 237 metropolitan areas across the U.S. as well as the national averages. According to the latest HOI survey released on May 10th, rising wages have offset rising home values and interest rates, boosting housing affordability.

The latest HOI data show “61.6 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 $71,900. This is up from the 59.6 percent of homes sold that were affordable to median-income earners in the fourth quarter of 2017.”

➗How is the HOI calculated?

The housing cost calculation takes into consideration the price of homes and the interest rate. Today’s low-4% rates have made a huge impact on housing affordability. “Average mortgage rates rose by nearly 30 basis points in the first quarter to 4.34 percent from 4.06 percent in the fourth quarter of 2017.” Remember,these rates are still low compared to historical rates, which average around 7 percent. To understand the impact of interest rates on affordability, read this handy chart: Interest Rates and Home Affordability.Rent VS Buying a Home - explaining 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. Divide the 28% of average income by 12 to come up with a monthly amount allowable for a mortgage. Keep in mind that FHA limits are 31% for mortgage costs.

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⚖Affordability in Frederick Md

When explaining housing affordability, remember that local markets are different. While the National Affordability Index is at 61.6%, the local markets vary.

Washington DC, NVA, MD HOI

Frederick is a sub market of Washington D.C., which has an affordability index of 70.6%. The median income for the D.C. area is $$112,792, the median home price is $560,000.

Frederick MD HOI

The median income for Frederick Md households is $65,967, according to Google, and the median home price in Frederick is $325,000. Incidentally, without an exact number, I’m willing to guess that the affordability index for Frederick is similar to Washington D.C., Rockville and Bethesda, primarily because of home values.

Hagerstown-Martinsburg MD-WV HOI is 84%. The median home price is $149,000; the household income is $55,862.

Incidentally, the MOST affordable area is Cumberland Maryland, where 98.5% of households can afford the median priced home of $80,000.

🔎SEARCH for Homes in Central Maryland

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🏡Should I Rent or Buy in Frederick Maryland?

Given the fact that Frederick County is very affordable, compared to metropolitan areas nearby, and given the fact that home values are on the rise, let’s establish that it is generally a good time to get into homeownership. The real questions you must answer are about your personal situation.

For some people, buying their home makes the most sense, and for others, renting is best. Here are six questions to help you determine if 2018 is the right time for YOU to buy:

Note:  Some of the answers might surprise you so read on…

💲1. Do you have savings?

Even though there are a number of zero down payment programs, you must plan for closing costs and many other one-time expenses as a homeowner. Insufficient savings may not prevent you from buying a home but it is a strong indication that you may not be prepared for the ongoing financial requirements of homeownership.

Rent VS Buying a Home - explaining housing affordabilityHow much should you have saved? It depends on what price range you are considering, as well as the loan you will be using. With an FHA financed loan, you will need to have 3.5% for a down payment. On a $325,000 home (average in Frederick) that is $11,375. You will have some other expenses, like the home inspection, typically $400 to $500. You may have some closing costs, like origination fees, and fees from the title company, typically 2% to 3% of the purchase price. Sometimes buyers can negotiate with the seller to pay closing costs, but its best to be prepared.

How much do you need for a downpayment on a home? For most first-time buyers, FHA loans are a great choice, with low-downpayment and common sense qualification criteria. But there are also conventional loans and VA loans to consider. The downpayments will vary with each loan and each lender.

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💳2. How much debt do you have?

A lender will calculate your debt-to-income ratio, which is different for each loan product. Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income.  A conservative number to shoot for is having a mortgage that is 28% of your income. This is called the front-end ratio. Most mortgages have a maximum back-end DTI ratio of 43%. The back-end ratio takes all your debt into account.

You can do a quick calculation and decide how you fare in the category of debt. To calculate your debt-to-income ratio, add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is the amount of money you have earned before your taxes and other deductions are taken out.

If you are thinking about a home purchase you’ll want to plan ahead to minimize your debt. You’ll want to consider foregoing a new car purchase. You’ll want to pay down your credit cards and pay off some debts.

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📊3. How is your credit score?

Your credit score is an important asset. Your lender will consider your score as an indication of your credit worthiness. Typically, the higher the score, the lower your interest rate. Additionally, your credit history is important. While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good.Credit Score

Minimum Scores. While FHA and Freddie and Fannie have minimum scores, (A minimum of 580 is necessary to make the minimum down payment of 3.5%.) many lenders have their own requirements. (FICO credit scores start at 300 and go up to 850.) Most lenders require a score of 620 to 640 to qualify. The higher your credit score, the lower risk you are. The lower risk you are, the lower your interest rate. Shoot for a high credit score, not a minimum score.

Related Article: How to Build A Credit Score Lenders will Love

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📈4. Is your employment situation steady?

While we can never predict the future, you probably have a sense of your job or business security. If you’re working for a start-up company, you probably want to wait for a secure situation. The last thing you want is to saddle up with a mortgage and then find yourself unemployed, or underemployed.

🕰5. Are you going to be around for a while?

Again, we can’t tell the future, but you’ll want to be sure that you can stay in your home for a minimum of five years. If you expect to get a job transfer within a few years, you may end up paying money in order to sell it. You’ll want to make sure your home value increases enough to cover the costs to sell your home.

The length of time that it will take to cover those costs depends on various economic factors in your area. Currently in Maryland we’re seeing an average of 3-5% appreciation per year. This is considered normal and healthy and will cover buying and selling costs in about five years. 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, and in the unfortunate circumstance of an economic downturn, the opposite is also true.

How long will the home meet your needs? What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you’ll want 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. However, 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? Having an idea of what you’ll need will help you find a home that will satisfy you for years to come.

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👷‍♂️6. Are you ready for the responsibility?

Rent VS Buying a Home - explaining housing affordabilityThere are costs and responsibilities with homeownership that most renters are not accustomed to, things the landlord took care of. Home insurance, home maintenance and repair, appliance replacement, and home maintenance and repairs are all important considerations. Most experts suggest you save 1% of your home’s value every year. Saving for long-term projects, like replacing the roof or the HVAC system, will save you the emergency of the cost of replacement when there is a sudden breakdown of a major system, or the inevitable replacement because of age.

Your home is probably the most expensive purchase you will make in your lifetime. It is a place to build your nest, both figuratively and literally…your financial nest egg. You will want to take care of the maintenance of your home regularly to maintain its best value throughout the years you own it.

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😀Is This the Right Time to Buy a Home in Central Maryland?

Once you have crunched all the numbers, considered your financials and future employment, the decision is really about lifestyle. For most Americans home ownership is the most likely method to build wealth. It is also the way to create a lifestyle that best suits you and your family. Those intrinsic desires are best accomplished in your home…paint the walls the way you want, plant a garden, get a swing set, and enjoy the freedom to build a nest, both financially and metaphorically. Rent vs buy – explaining housing affordability, we hope it helps with your plans!

If 2018 is your year, give us a call and we’ll help you find your nest.

Chris Highland                  Search for Homes in Maryland
Broker, eXp Realty
Frederick, Md 21701

How Much Do I Need for A Downpayment on a House?

How Much Do I Need for A Downpayment on a House?

🤥Myths Abound Concerning Down-Payment Requirements

There are several reasons why there are myths circulating about how much home buyers need to have saved for a downpayment on a home. Studies by NAR (National Association of Realtors®) show that half of Americans believe the misconception that you need to put 20% down on a house. This is just not the case.

It’s possible that since the housing collapse of 2008, the many discussions of solutions to, and prevention of another crisis have left consumers with misunderstandings. There has been a lot of talk by housing authorities about raising the required down-payment, but that hasn’t happened. The reasoning is, with more skin in the game, home owners will be much less likely to walk away from their mortgages.

While that is eminently true, raising the required down-payment to 15% to 20% would put so many people out of the market, it would be devastating to the housing market. That kind of money is just out of reach for the majority of Americans. [that opinion is mine]

As well as the discussions of how to solve and protect against another mortgage meltdown, there is another source of misinformation that we all love to watch… I call it HGTV-ism…it comes from watching too many TV real estate shows! I love to watch them, I admit, but they can sometimes lead many people to false conclusions. So…

💰How Much Do I Need for A Downpayment on a House?

real estate negotiating1. With an FHA guaranteed loan, the required down payment is 3.5%. FHA loans are often the choice of first-time buyers, because of the low down-payment and because the qualification process is based on more than just the credit score. Common sense underwriting will consider your payment history, as well other indicators of credit-worthiness. FHA also requires that the property meet certain minimum standards.

Fannie Mae recently announced 3% down payment mortgages to help first-time homebuyers who can’t afford a large down payment but would otherwise qualify for a mortgage.

“We know that access to credit remains tight for many borrowers, and we are working to address this issue in a responsible and thoughtful manner…To increase access for creditworthy but lower-wealth borrowers, FHFA is also working with the Enterprises to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95 and 97 percent. Through these revised guidelines, we believe that the Enterprises will be able to responsibly serve a targeted segment of creditworthy borrowers with lower-down payment mortgages by taking into account “compensating factors.” ~ FHFA Director Mel Watt

2. With a VA Loan, as always, there is no down payment. VA LoansThis is truly a great way to say thank you to our veterans for serving us. But even with VA loans, there are myths that circulate. For instance, did you know that a VA loan can be used more than once? There is also no required mortgage insurance, even though the loan is for more than 80% of the value of the property.

Our friends at Inlanta Mortgage – Madison have written extensively about the requirements, value and benefits of a VA mortgage:

With both VA Loans and FHA guaranteed loans, the buyer must occupy the home as their primary residence. Both loan types make it possible for borrowers with less than perfect credit to get a loan. Emphasis is placed on the most recent 12 months of credit history. Even so, VA mortgages have the lowest rate of default among all mortgage types.

3. Conventional Financing is another option. A conventional loan, sometimes called a conforming loan, is not insured or guaranteed by the federal government. It adheres to the guidelines set by Fannie Mae and Freddie Mac.

A borrower can get a conventional mortgage for 20%, 15%, 10% down, and even for as little as 5% or 3% down, when combined with family gifts or other form of down payment assistance. Every state in the country has some type of down payment assistance program for qualifying buyers.

With a Conventional loan, naturally, the lower the down payment, the stricter the qualification requirements. With a conventional loan, you can often get a lower interest rate.

The 20% limit comes in to play because when a buyer puts down less than 20%, they must purchase private mortgage insurance. Once the mortgage gets paid down to more than 20%, the mortgage insurance drops off.

The differences between FHA and Conventional loans can be found in mortgage insurance regulations, qualification requirements and closing costs, as well as other items. Be sure to consult a lender for all the information about lending, loan products and standards today.

🤔Where Can I Get Money for A Downpayment on a House?

Many people who would like to be in the market to buy a new home are wondering where they will get the money for a downpayment.  Following one of the worst recessions in our history, the average American’s savings are at the lowest in 75 years. There are ways to get closing cost help which are allowable by FHA:

Gift Funds

FHA will allow for a homebuyer to receive the down payment as a “Gift” from a family member or non-profit organization.  There are county and state non-profit programs which you may qualify for.  If you are receiving a gift, you must provide the complete papertrail of the money, including the giver’s bank statement, to prove they had it to give.

Employer, Local and State Funds

There are several non-profit sources for closing cost help.  Many employers offer programs that match funds, city, county, and state employees have access to programs.  The Maryland Mortgage Program is one such program with generous limits and terms.

 Grant America Program is a government grant program that provides anyone who qualifies for an FHA loan with a down payment grant to be used towards the purchase of a home. The US Dept. of Housing and Urban Development has lists of programs that assist with downpayment costs.

401K Accounts

The IRS discourages people from withdrawing money from their retirement funds early by levying a 10% penalty. Except for a 401K account. An option with a 401k is to take out a loan. Your loan can be a minimum of $10,000, up to $50,000 or half the value of the account, whichever is less. If you must borrow against an account, you must be able to qualify with the monthly repayment amount. The interest rate will be a bit higher, but you’ll be paying yourself. There are pros and cons to borrowing from your 401K.

Seller Contributions

If you are buying a home with a conventional loan, then there are no laws keeping the seller from contributing to closing costs.  Different loan programs have different allowances, though, so you’ll want to shop around.  I read a statistic recently that said that the average consumer spends 15 hours in research when buying a car, and only 5 hours in research when shopping for a home loan.

For more information, talk to your lender about the types of assistance that may be allowable, and search for available programs on sites such as Down Payment Resource™.

In an environment that is constantly changing, having a trusted adviser in real estate and lending is more important than ever. Contact us for a lender referral. 301-401-5119

🏡Search for Homes in Central Maryland

The Home Buying Road Map – How to Buy A House

The Home Buying Road Map – How to Buy A House

The Home Buyer’s Road Map

Studies still show that the majority of Americans still see home ownership as part of the “American Dream”. In a 2017 Pew Research Center survey, 72% of renters said they would like to buy a house at some point. If buying a home is on your list of to-do’s, you probably know that preparation is in order. The home buying road map will help in explaining the process.

It’s a good time to buy a home. Here’s why:

  • Interest rates are at historical lows. Historically, the average mortgage rate is between 7% and 8% (since people have been keeping track…since c.1971) Rates have been bumping around the low-to-mid 4’s for several years. These rates drastically increase buying power.
  • Home prices have decreased (2006 – 2010), bottomed (2010 – 2014), and are rising since 2014. When values are rising, it’s a great time to buy.
  • There is a small, but good inventory of homes on the market to choose from. More homes come on the market every week.

Buying a home is one of the smartest purchases you can ever make. For generations, many Americans have used real estate as their first avenue of wealth building. Building your own equity over years is one of the smartest and most likely ways to gain wealth, and it’s a very real hedge against inflation.

Another reason is that home ownership has many positive tax implications. The three most important sources of tax savings for home owners are;

  • deductions for mortgage interest
  • deductions for real estate taxes
  • capital gain exclusion for the sale of a principal residence

The Home Buying Road Map

The process of buying a home is usually not a quick process. That’s why its important to have an experience Realtor® along for the journey. Here’s my interactive “Home Buying Road Map” to put the typical* home buying process in an understandable context. Each touch point is leads to more information on that topic.

Buying a home is not an event, it’s a process. Helping first time home buyers navigate the process is one of our favorite parts of selling real estate in central Maryland. While there are several moving parts to the process, from negotiations to appraisals and inspections, it is always a joy for us to help people enter into home ownership.

The Home Buying Process

10 Road Signs Along the Way:

  1. Consult a Realtor®. Use an experienced Buyer’s Agent to help along the way.
  2. Get Pre-Approved. Use a trusted LOCAL lender. Your buyer’s agent will have some recommendations.
  3. House Hunting with your buyers agent. Your agent will be invaluable in navigating your local market.
  4. Make an Offer. There are a lot of moving parts to crafting a strategy that will win.
  5. NegotiationsExperienced agents negotiate for a living. Put your agent to work for you.
  6. Formal Loan Application. Yes, that means paperwork. Make sure you are prompt with it.
  7. Inspections. and more negotiations.
  8. Appraisal.
  9. Walk-through. Go through the home up to 5 days before settlement to assure repairs were made and the home is in accordance with contract terms.
  10. Closing! Congratulations!

For most Americans, purchasing a home is their entry to building wealth. It is also the entry to a lifestyle and to stability for a family. We can’t think of anything we’d rather be doing. Contact us for a guided tour of the home buying process.

Use our Property Search to find your new Maryland home

*Typical home buying journey is just that, but not a guarantee.

Five Reasons to Buy A Home in Winter

Five Reasons to Buy A Home in Winter

How Buying a Home in Winter Can Make the World A Better Place

We’ve all heard the conventional wisdom about buying a home in the spring, when the real estate market is more “active”. But sometimes, it doesn’t always work out that people can buy in the spring. Sometimes waiting until spring doesn’t make sense or fit someone’s time frame. Sometimes there is no need to wait. I can think of at least five reasons to buy a home in the Winter:

Consider the Competition

1. There is lower competition from other buyers.  Generally, families with children prefer to move into their new homes during the summer so the kids can easily transition to a new school. Therefore, the spring and summer months are busier in the real estate market and there are usually more listings and definitely more buyers.

We’ve had a lower than normal inventory of listings for a few years in the Frederick real estate market. Last spring and summer we saw a lot of multiple offers on the homes that were priced competitively and in good condition. We’re expecting a similar thing in 2018. Demand continues to outpace available homes.

As a buyer, you’ll find far less competition in the winter months. Fewer buyers means fewer multiple offers and less likelihood that you’ll be outbid. With less competition, sometimes buyers find that they have a little more breathing room to make a decision.

In the busy real estate season with the possibility of multiple offers, sometimes decisions have to be made in hours or even instantly. For some buyers, that frenzy of decision making is very stressful. If you find that you are easily stressed by the rush and pressure, consider buying in a slower time for your market. Winter and fall are usually a more relaxed time to buy, one of the best reasons to buy a home in winter.

Consider the Process

2.  Because there are fewer contracts written, its possible that the entire process can be smoother and quicker. Everyone involved: the lender, the title company, the home inspector, and the Realtors® are usually (not always) not as busy. Even the contractors are not as busy if you need repairs or items come up in a home inspection.

Your real estate transaction may be one of a dozen, rather than one of five dozen. You may even get a little more personal attention, one of the best reasons to buy a home in winter! (imo)

Again, if a more relaxed process is important to you, consider buying a home in the winter months. People are often “nesting” and staying cozy and warm, not out braving the cold weather. Home buyers are often still in the consideration mode, researching the process and getting their finances ready. It can be a great advantage to jump ahead of the rush.

Consider the Sellers

3.  Motivated Sellers. Though there are fewer buyers and the inventory of listings is often lower than the warmer months of the year, the sellers who still have their homes on the market are serious and highly motivated. A motivated seller is ready to negotiate.

Sellers who get ahead of the spring market and list their home in the winter months are also motivated. (No one puts up with buyers trampling through the snow and into their home unless they want to sell their home!) Savvy sellers know that selling in the winter can be an advantage in the same way that buying a home is…less competition and fewer, but motivated buyers.

Consider Financing Conditions

 4. The average and median sales price of homes dips during the winter months, according to long-standing statistics. The number of homes sold  typically decreases as well. As mentioned earlier, generally, fewer buyers are out looking and the inventory is lower than in a spring  or summer market, although that doesn’t hold true every single year.

The price fluctuations from Mid-year to January are interesting to note. I want to be very careful, however, to refrain from drawing conclusions. Several different theories are used to explain this. Some think that sellers are more motivated. Some think there is a different inventory in the winter months, explaining that listings during the winter months includes more distressed sales, fewer traditional sales. Some think that the makeup of buyers is different; more investors are in the market. I can’t really say why, but statistics show that average sales prices dip a little during the winter.

Are You A Move Up Buyer?

reasons to buy a home in winterSelling your home and buying another home can be a challenging endeavor. Time frames have to align between two sets of sellers and buyers. Sometimes the process is a lot smoother if people have a bit more time and are a bit more relaxed.

If you are one who doesn’t enjoy a frenetic pace, you might find that buying and selling a home in the winter months fits with your way of living and making big decisions.

Consider the 2018 Outlook

5. As far as this winter goes, it makes sense to buy now, rather than at the end of the year. Interest rates are projected to rise this year. The Mortgage Reports is a site I like to follow for information, news and projections. Here is an excellent article about what we can expect in mortgage rates for 2018. According to my gurus:

“There is no shortage of market-moving news in January. More important, the month sets the tone for the new year.That’s why it’s important to focus on this month’s events, but also predictions for 2018.”

The general consensus is that the 30-year mortgage interest rate will go up in 2018. We’ve already seen the interest rates bump after good economic news in 2017. Many experts feel that mortgage rates are actually too low for an economy that is doing so well. Here are the top predictions:

  • Freddie Mac: 4.4%
  • Mortgage Bankers Association: 4.6%
  • Kiplinger: 4.4%
  • National Association of Home Builders: 4.2%

So buying today before interest rates rise can save you on your monthly mortgage. This is one of the most logical reasons to buy a home in winter… See how interest rates affect your monthly mortgage.

In Conclusion – Reasons to Buy A Home in Winter

While buying a home in winter may not necessarily make the world a better place, it will certainly make YOUR world a better place! There are lots of benefits to owning your own home. Paint your walls in the color of your choosing, redecorate as you please, remodel to your liking, plant a plethora of flowers to enjoy, and enjoy the financial gain of building equity. Your world and your family’s will certainly be a better place!

Contact Chris
Highland for buyer agency in your home search. Use our advanced property search to find homes in Central Maryland.

Reasons to Buy A Home in Winter
Happy Home Hunting!


Photo Credit to: Porsche Brosseau on Flickr

Why Zestimates Are Zillow’s Weak Spot

Why Zestimates Are Zillow’s Weak Spot

😠 Why Realtors® Dispise Have Strong Feelings About Zestimates

Zillow is a popular site for consumers to see homes for sale, no question. If you are looking at homes for sale in your local market, however, I recommend using a local real estate website search, like Zillow has some good information, like demographics and statistics on an area and maps. But, as the meme points out below, Realtors have strong feelings about Zillow. 

inaccuracy of zillow


😏 Two Aspects of the Zillow Website that Have Low Value

There are two aspects of the Zillow website that I don’t find value in:

  1. ‘Zestimates’, and their lack of accuracy in listing information.  The listings many times can be out of date as to their status, and the
  2. Zestimates are very often off by a significant percentage.

[In a  Washington Post article, a Washington D.C. brokerage was quoted for documenting that Zestimates are getting worse. Of 500 estimates, the values ranged from 62% under, to 150% over the actual sold figures.]

😳 The Flaw is in How Zestimates Are Calculated

Zestimates have been wrong more than they’ve been right. Because they use an algorithm to formulate values all across the country. The same computations in every location. It’s not even remotely feasible that a “one-size-fits-all” mathematical equation could get it right, when determining a home’s value is dependent on so many local and subjective variables.

zestimates are zillows weak spot
Even children are aware there is a difference in housing!

A complicated formula can come up with a uniform value, but the problem with that is that all real estate is not uniform, it is local. ‘Bricks and sticks’ in one neighborhood can have a different value than the ‘bricks and sticks’ in another location, due to all kinds of subjective factors. Proximity to highways, power lines, and unsightly commercial areas are an example of things that affect a home’s values in a subjective way.

All real estate is local, even micro-local. Values for similar homes in one neighborhood can be completely different in a neighborhood only blocks away. Zillow can’t get inside a home and see the differences in amenities…like an updated kitchen with pristine hardwoods, granite countertops, custom maple cabinets and top-of-the-line appliances; compared to a similar home with basic builder grade finishes and 15-year-old carpet.


Any online valuation is just a rough estimate of value. The best thing to do is contact your local REALTOR® to determine true values.


☺ Local Realtors Know Values

Only a local Realtor who knows the area can provide a realistic estimate.  He or she knows the local neighborhoods and values based on everything that is objective as well as subjective.  A local Realtor knows what the trends are in the neighborhood. Some areas hold their value better than others, due to a lot of factors: Type of construction, age of home, added amenities, and what’s going on in the neighborhood or area.

🤔 Case Study on Home Values of Frederick Neighborhoods

Our recent experience is that some neighborhoods are more effected by the downward drag of foreclosures and short sales on the market than other neighborhoods are. Two particular neighborhoods here in Frederick were primarily built during the years from 2003 – 2006, and the majority of the homes were financed with Adjustable Rate Mortgages (ARM’s). Unfortunately, when the rates adjusted after the values had fallen…these neighborhoods were filled with short sales.

Comparable home sales were difficult to calculate with a generic mathematical equation. As a local Realtor we monitor the trends in the marketplace and know how to determine market values.

😇 Pricing Accuracy is the Key When in Listing Your Home

Consumers using Zillow think the estimates are real. The aspect of listing accuracy doesn’t cross their mind when they are looking online for homes for sale. Zillow is the most trafficked website in the real estate sphere, but the least accurate in almost every respect. (Popular doesn’t always mean it’s valuable)

However, consumers regularly find inaccuracies. We get contacted osten about homes that are listed on Zillow as active, but have either been under contract for even weeks, and many times have sold weeks or months ago. The inaccuracies include a lot more than status; consumers often find many details wrong, including the number of bedrooms and baths, the square footage, and even the information from the tax records. Among the different categories of “potential listings”, the pre-foreclosure category is very misleading.

As Bill Gassett points out in his article, Some Zillow Listings Are Not For Sale, the data Zillow collects on these homes comes from Realty Trac, a site that collects data on distressed housing, these homes are most often, not even on the market.


Data can be faulty. It happens. Sometimes it’s no one’s fault, it’s an imperfect system that data engineers are still perfecting. But sometimes it’s by design. The longer homes are listed as available, the more traffic the website gets. The more homes listed, like pre-foreclosures, the more “eye candy” on the website to attract visitors. Add to that more push notifications that people get on the Zillow app as they search neighborhoods.


Zillow is, after all, a marketing site that makes money from advertising. It is not a site designed or monitored by licensed real estate professionals. They aren’t bound by the Realtor® Code of Ethics, which requires that any information agents publish be accurate, to the best of our ability.

🤓 Why Does Accuracy Matter When It Comes to Real Estate Data?

“If I just want to see houses, who cares?” Fair question. Let’s consider the Zestimate…

When a seller contacts an agent to list their home for sale, the agent conducts a Comparable Market Analysis, or CMA, to get a close estimate of what the home will likely sell for, based on comparable home sales, local trends and market analysis. Experienced Realtors who have local knowledge have been helping buyers and sellers in the local market and have been active in your neighborhoods. They’ve probably even seen firsthand many of the comparable homes in their market as they’ve worked with buyers and sellers.

“But Zillow Says…”

Zestimates are Often WrongSo imagine when the agent presents their hard-earned knowledge about the home’s value in the CMA (comparable market analysis), only to hear from the seller: “But Zillow says my house is worth $50,000 more?!” That seller is already set up for failure because of the inaccuracy of that Zestimate, sometimes a gross inaccuracy.

First of all, it puts doubt in their mind about the Realtor®. Secondly, if they disregard the agent’s advice and they overprice their home, they will do damage to their prospects of actually selling the home for the highest amount in the shortest time.

How False Estimates Affect the Buyer

It’s easy to see that the expectations of the buyer will also be skewed when they see an inaccurate Zestimate. Right below the list price you can see the Zestimate, so at the very outset of seeing the home, a buyer will have it in their mind that the seller is asking too much, or too little.

If the list price is lower than the Zestimate, imagine the buyer’s disappointment when they get to the home and realize it’s not the bargain they thought it was. The expectations that Zestimates give buyers a false sense of home values, many times grossly false, and can result in a lot of wasted time.

If they believe the list price is high, it will be hard for them to take the Realtor’s advice about what price to offer. We’ve seen our share of lowball offers from buyers who just didn’t take their buyer’s agent’s advice. We’ve seen just as many offended sellers rejecting those lowball offers!

😡 Lousy Expectations Caused by Inaccuracy of Zestimates on Zillow

mortgage shoppingBecause of inaccuracies, we regularly see missed opportunities, discouraged buyers who show up at a home that’s already sold, and lots of wasted time looking at homes that are nothing like the buyers thought they would be. We’ve seen wasted time on the market for sellers, and we’ve seen these sellers fire very good agents for things that are not their fault.

In my opinion, that is the real damage of inaccuracies…Lousy Expectations. Zillow discloses the percentages of their inaccuracies…way over on the page that you can barely see for the small print. It’s there. But most buyers and sellers never see it. They are unfortunately, subject to the disappointments of lousy expectations.

So contact a local realtor to find local values.  And use Zillow for other useful information. Take Zestimates with a grain of salt…if you even look at them at all.


Sellers: Did you know you can help improve your zestimate accuracy?


😭 Zillow Lawsuits Are on the Rise

There have been several lawsuits against Zillow in recent years…this time they are being sued for their Zestimates violating federal Antitrust laws. A New Jersey management company just filed yesterday (Jan. 15, 2017) claiming Zillow is giving preferential treatment to preferred brokerages, by selectively allowing certain brokerages to “conceal” the display of Zestimates on their listings. Wow. If that is true, that does seem like it may be an antitrust issue. I’m not an expert, but antitrust means restraining free trade.

In last year’s lawsuit, the Consumer Financial Protection Bureau (CFPB) is still pushing Zillow to settle RESPA claims, regarding their co-marketing program under which a lender pays Zillow to appear in advertising alongside a real estate agent. The CFPB is under scrutiny under this administration, but it still has a lot of scary power.

In 2016 Zillow settled a $130 million lawsuit with competitor Move Inc. over stealing trade secrets and poaching executives. (Zillow and the executives admitted no wrongdoing as part of the settlement). These lawsuits and payouts seem to not be affecting Zillow’s business at all. But it does indicate a lot of dissatisfied people.

Also in 2017, Zillow had a lawsuit dismissed. A group of homeowners sued over the alleged damage to their home selling prospects by inaccurate Zestimates. Judges have dismissed a total of four lawsuits to date, according to Forbes.

🤨 Three Things I Wonder About Zillow

How do these continual lawsuits and settlements affect Zillow’s business? We see that in many recent quarters they operated at a loss.

A second thought, I wonder if these multiple lawsuits from people claiming damage, even though dismissed, brought on the attention of the CFPB? Just a wondering real estate agent…

For buyers and sellers who may not be aware, Zillow charges agents and lenders advertising fees for placement on their website. When you see a house listed, you see several professionals listed with the house. They are there because they paid to be there.

Over the last few years, the amount they charge has skyrocketed in a lot of areas of the country. I keep wondering if this is because of the enormous settlements they keep paying on these lawsuits, and if at some point, agents and lenders are going to say, “enough”, the return on investment is not enough to warrant it. What will happen to the quality of Zillow’s website, which in many real estate agent’s opinions is already gone down the tubes.

🤯 Bottom Line

Lawsuits aside, Zillow is the public’s favorite, with over 160 million monthly visitors! As I first said, the website has a lot of great information for consumers. Real estate professionals advise their clients to take Zestimates with a grain of salt.

All online algorithms like Zestimates and valuations from other platforms are inaccurate. They are machine computations. Estimates are just that, estimates. Similarly, a lot of the appraisals that are conducted by licensed appraisers are also inaccurate and often come in lower or higher than what they should. Nothing beats local market knowledge. “Boots on the ground” Realtors® are the ones behind all of the stats and demographics, not an online algorithm. Count on a local, experienced professional, like Chris Highland with eXp Realty, to give you the most accurate data.

🤩 Additional References on Zillow and Zestimates

But don’t take my word for it. Here are several articles from some excellent real estate bloggers that have much to say about Zestimates and Zillow:


This article was updated January 16, 2017, from it’s original publish date of May 4, 2015.

To see your central Maryland home Value (an accurate one!), we’ll be happy to do a complimentary CMA for you. Contact the Highland Group today: 301-401-5119

 Related Reading: 15 B.S. Facts About Real Estate That AREN’T True

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Cell: 301-401-5119
Broker – 888-860-7369

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 key to wealth building. While the economy has been in recovery and the housing industry is making a comeback, it is a good time to reevaluate whether home ownership is the right choice for you, if you’ve 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:

homeownership is key to wealth building


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 2017 it is cheaper to buy than to rent in ALL 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% – 6% throughout 2018. Rents are increasing more than home values.

According to the Federal Reserve’s Survey of Consumer Finances, a typical homeowner’s net worth was $197,500, while that of renter’s was $5,200 as of 2017 (a decrease from $5500 in 2013). Given that home prices have risen by nearly 20% since then, according to Federal Housing Finance Agency the wealth of home owning Americans would have grown even more.  That is, a typical homeowner will be ahead of a typical renter by 45 times, on a lifetime financial achievement scale.

Historically low interest rates combined with reasonable home values has maintained the affordability of real estate. While home values have increased by 4% nationally over last year, which is a normal, healthy percentage, these values will only continue to increase. Buying a home is a better option for those who are capable.

*While news outlets love to fret over a looming “housing bubble”, the statistics clearly show that home values are increasing in a healthy fashion.

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 double that of wage growth in most 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.

Home buying motivations for most Americans include having control and freedom to create the home they want. To paint the walls and choose the flooring, and to decorate to their heart’s content. Parents want a yard for their children (including the fur children). They want to choose a home in a desirable school district. In short, they want more control over the lifestyle they want to live. Homeownership facilitates all of the above.

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 has been and continues to be home ownership. Homeownership is key to wealth building, and will continue to be so in the future.

Homeownership is Key to Wealth Building

Case Study: Karen’s 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 as well…the real estate did!) All of this took place over 35 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.”


Helpful Resources Regarding the Benefits of Homeownership:

If you’re ready to make the step to homeownership, give us a call, we can help you through the process. Chris Highland, 301-401-5119. Or Contact Us Here.


Top Homeowner Regrets – How to Avoid Buyer Remorse

Top Homeowner Regrets – How to Avoid Buyer Remorse

😞Homeowner Regrets (a.k.a. Buyer’s Remorse)

A recent survey of thousands of Americans found what many of us refer to as “buyer’s remorse” among homebuyers. While I’m not fond of rehearsing people’s pain, the top five homeowner regrets are instructive to those who are considering a home purchase. The latest survey shows that 51% of homeowners had regrets about their current home. That’s worth listening to.

Today, 44% of Americans have a regret about the process they went through when buying their home, a slight decrease from 46% five years go, When Trulia first conducted this survey. When buyer’s are competing for a limited inventory, as we have seen this year in Frederick and central Maryland, they need to resist some of the temptations to “settle” for something that they will regret later.

😢Top 5 Homeowner Regrets

Incidently… (41%) Renters wish they had purchased a home instead of renting.
1. (33%) Homeowners wish they had purchased a larger home.
2. (26%) Homeowners wish they had done more remodeling when they bought the home.
3. (16%) Homeowners under age 34 wish they had been more financially stable.
4. (15%) Homeowners wish they had had more information about the home before buying.
      (down from 22% 4 years ago.)
5. (13%) Homeowners who are parents wish they had chosen a home in a different school district.

If you are ready to enter the real estate market, knowing the right questions is the best way to minimize the chances of home buyer’s remorse. You will do well to ask yourself these questions before you even start your home search:

👨‍👩‍👧‍👦How Soon Might We Outgrow the Home?

1. Will we outgrow this home in a couple of years? In today’s real estate climate, it’s become standard advice to plan to be in your home a minimum of five to seven years. When the market is healthy, homes appreciate an average of 3% to 6% a year. home buyers remorseYou can estimate that the length of time it will take to build enough equity to be able to sell the home in a healthy market will be around five years at a minimum. If you are more conservative, you may want to consider seven to eight years as a better estimate.

Whether newlyweds, or a growing family, or a family with older children, it’s always wise to think about the “What-ifs” in life. While we don’t have a crystal ball, we can take a look at future possibilities and consider what life may throw at us.

🛠How Likely Are We to Do the Necessary Renovations or Remodeling?

2. Do you have the budget or skills to do the maintenance, repairs or remodeling that a home might need? If you plan on selling sometime, the home will need to be current with the market standards for the neighborhood or area. Make sure that you can afford to invest in your home. Maintaining and repairing your home is the best way to get top dollar when it’s time to sell.

Many times over the years we have seen home buyers who fall in love with a home that has a major flaw. As we point out the difficulty they might find when they want to sell, they promise that they will do the work to correct the flaw. Good intentions. But far too often, the work needed to remedy the problem never happens. Life is busy, money is invested elsewhere. So, we like to say, “really, ask yourself, how likely are you to get it done?”

⚖How Stable is Our Situation…Really?

3. Are you comfortable with the amount of your down payment? With your monthly payments? When you sell in the foreseeable future, will you have enough equity? Are you comfortable with your employment situation? Are you comfortable with the upward momentum, or lack of, that your employment situation will bear out? Although no one can know for sure, you need to feel confident in your future.

🤔Do We Have The Complete Story?

4. Do you have all the information you need about the house? the neighborhood? Do you have information on the utility bills, the taxes and the general maintenance the home will need? Are you clear on the details of your mortgage? Have you made a budget that reflects the true expenses of owning the home?

home owner regretsRemember, if you are a new homeowner, there will be expenses you didn’t carry as a renter. First-time home buyers can often be surprised by important issues simply because they haven’t had the experience of home ownership.

Make sure you use an experienced buyer’s agent who will give you good advice, and keep you from the major first-time home buyer mistakes.  Make sure you have everything you need to make an informed decision.

🚸Have We Checked Out the Schools?

5. More than in the past, school districts make a big impact on home buying decisions. Although no  one can guarantee that districts won’t be reconfigured as populations change and grow, checking out the school district of a home is an important step for parents.

Many studies show that school districts can impact home prices. A Redfin study from 2013 found that there is a correlation between home values and school districts:

“Using a huge database of about 407,000 home sales and nearly 11,000 elementary school districts in 57 metropolitan markets, the study concluded that, on average, buyers pay $50 more per square foot for homes in top-rated school districts compared with homes served by average-rated schools.” See the Washington Post Article.

Not all neighborhoods and communities are subject to these correlations between school districts and home values, but it is important to research. Home buyers who don’t have children living with them will also want to pay attention to this data, if the area where they are considering a home purchase is affected by school district variations. Make sure you choose a Realtor® who knows the local neighborhoods and can point you to the right resources.

😎Use A Qualified Buyer’s Agent

There are a lot of factors that affect home values in a community, from home construction, to local amenities, neighborhood location, to commuting availability…the list is long and varies. It is in a buyer’s favor to use a qualified buyer’s agent to help them purchase a home that will not only suit them today, but continue to be a great asset. Home buyers should never forget to think of resale while they shop.


As much as possible, make sure you get your questions answered by all real estate professionals involved in your purchase. Even though you’ll probably need to move quickly in a competitive market, don’t let anyone rush you into anything that will make you have homeowner regrets of your own. Doing your research ahead of time can save you some #facepalm moments! Make sure you can count on your real estate agent as a trusted adviser, so you will not have home buyer remorse.

See the report at

Contact Chris Highland for Buyer Representation. 301-401-5119. His 25+ years of real estate experience serve as a great resource to clients as they maneuver through today’s complex real estate transaction.

🏘Search for Homes in Frederick Maryland

🏡What’s My Home Worth?


What Does A REALTOR Do?

What Does A REALTOR Do?

A Day in the Life of A Realtor®

What Does A Realtor® Do For You?
A survey found that for every hour a real estate agent spends in your presence, he/she will spend an average of nine hours out of eyesight working on your behalf. What does a Realtor® do all day, anyway? Unlike a lot of professions, where people are paid hourly or are on a salary with weekly or bi-weekly pay checks, in most situations real estate agents don’t get paid until the home sale/purchase closes. In the mean time, they are doing multiple tasks behind the scenes for weeks, sometimes even months, to get a home transaction to the settlement table. In today’s complicated real estate environment, there are hundreds of tasks. While each client and each home sale is different, here’s a look into the what, when, where and why in the day of a real estate agent.

Knowledge of the Local Market

Both buyer’s agents and seller’s agents must keep up with the inventory of the homes that are on the market. They must know details of homes that have recently sold, and the latest market statistics. This includes every neighborhood, community and area in which they work. Proficient agents must know the market trends, like how long homes are taking to sell, what the average and median prices are, how much seller’s are getting in sales price compared to their list price…and much more.

Staying on top of the local market takes hours of research, whether it’s combing the multiple list service daily to see what’s new on the market, or seeing what the sales prices were, or how much homes are selling for on average compared to their list price, or conducting numerous comparative market analyses (CMA). The inventory and data is changing every day and requires constant review.

Market knowledge also requires that agents personally tour homes, whether through broker’s opens or by previewing the home personally. Real estate agents must be familiar with nuances in home styles, floor plans, construction details, and much more, to provide information to their buyers and their sellers. Knowledge of the lifestyle and amenities afforded by various neighborhoods and communities is crucial to help buyers find their dream home.

Knowledge of Real Estate Laws and Practices

To protect consumers, the Maryland Real Estate Commission has oversight of roughly 46,000 licensed real estate agents. Federal oversight includes the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission, and various Fair Housing laws. Buying and selling real estate is complicated in 2017 and is governed by state and local contracts and addenda. Incidentally, Maryland contracts are upwards of 35 to 50 pages these days, depending on the jurisdiction. A Realtor® must stay aware and informed on all real estate laws and forms used in the process.

Today’s constantly advancing technologies affect real estate like virtually no other industry. Real estate agents must stay on top of the latest technology tools available to best serve their clients. In an effort to be a trusted adviser to their clients, Realtors® take hours of required continuing education every two years. As well as credited classes, many take untold hours of non-accredited education to enhance their business acumen, and their skills.

Communication and Follow-up

Much of a real estate agent’s day is spent communicating. The mobile phone is a constant companion. Text messages, emails, and yes, old fashioned phone calls are an ever-present aspect of business. Communication can come from buyers, sellers, cooperating agents, lenders, title services, inspectors, office personnel, or third party vendors. Follow-up is vital in today’s on-demand world of business. For a real estate agent, the work day rarely, or dare we see never, ends at 5 pm Friday afternoon.

Managing the Real Estate Process

Buying and selling real estate is never an event. It’s a process. Like an orchestra, the real estate process has many moving parts and many human beings playing their parts. The Realtor® is the conductor. what does a realtor doFrom the first connection with the home buyer or home seller to the crescendo moment when they hand over the keys, the agent manages numerous aspects of the real estate transaction. There are literally hundreds of tasks that go into ensuring a successful outcome.

A Realtor® is a rare breed of business person, motivated by the desire to help people. Buying and selling a home is often the most complicated and expensive purchase of their lifetime. Buying or selling a home can be among the top stressful life events for people. Additionally, it is often accompanied by stressful life circumstances, like a new relationship, a divorce, new marriage, new baby, downsizing, change in job, relocation, and many other positive and negative life changes. Realtors® regularly find themselves in the role of manager, scheduler, concierge, researcher, paper-pusher, negotiator, coordinator, mediator, shrink/marriage counselor, child entertainer, messenger, problem-solver, and all-around chief cook and bottle washer, to name only a few!

Local Realtors® offer their buyers and sellers the benefit that comes from immersing themselves in every aspect of their local market. Every day of the year. To assure the best possible outcome in your real estate goals, take advantage of the expertise of a local qualified Realtor®. Make sure you choose a real estate professional that you can use as a trusted adviser.

For more information on choosing a REALTOR®, check out this list from some of my favorite bloggers:

Documentation for Your Frederick MD Mortgage Lender

Documentation for Your Frederick MD Mortgage Lender

Gather Your Documentation

Before you make a loan application, you’ll need to gather up some documentation for your Frederick Md mortgage lender. Each lender has their list of needed items, but most lists include these basic things:

  • Your landlord’s ( for the last 2 years) contact information. (First-Time Buyers)
  • W-2’s for each one on the mortgage
  • Recent paystubs for each borrower
  • The last 2 years tax returns for each borrower
  • If you are self-employed, an up-to-date Profit & Loss statement with the 2 previous years’ tax returns
  • Information on all outstanding loans, including credit cards
  • The last 3 months’ bank statements for all bank accounts
  • If you filed Bankruptcy within the last 7 years: You’ll need discharge documents, a written explanation of why you filed bankruptcy and proof of clean credit after filing.

Come Clean from the Beginning

Sometimes buyers try to withhold financial information from the lender, or forget about information that should be disclosed. With today’s record-keeping, it’s fairly certain that the information is going to surface during the loan process, so it’s really best to bring everything to the lender.

documentation for your frederick md mortgage lender

If you don’t disclose everything and some damaging information comes out during the process, it just creates a lot of drama along the way, and can have a negative effect on the loan process. Better to know upfront. Lenders are well-versed in the various problems borrowers can face and if they know in advance, they can come up with a possible solution that much sooner.

Two Main Players in the Loan Process

There are basically two parts to the loan process, the loan officer and the underwriter. Kind of a Yin and Yang. The loan officer is the salesman. He is “packaging” you so that you look your best to the underwriter. The underwriter is trying to find anything about your file that would warrant his denial of your loan. The checks and balances of this system work to make sure both parties, the bank and the borrower, are getting the best consideration.

Know Your Credit Scores

Before you begin the house hunting process, make sure to keep a close eye on your credit score. Credit is now more important than ever in getting the loan and getting the best rates. Remember that the credit score that a lender pulls is going to be different than the score you get from a service like Credit Karma, or similar tools.

Additional Reading: Credit Score Articles Credit Score first time buyers

You can and should get your free credit report from each of the three credit reporting bureaus every year. (Experian, TransUnion, and Equifax.) If you time them correctly, you can get a report every 4 months, which is sufficient to keep up with your credit. Checking periodically for fraud is just one reason to keep up with your report.

If you find that your score needs improvement, you can take steps to improve your score, with what is known as Credit Score Enhancement. By taking the correct steps, you can often improve your credit score in 6 months.

Getting a head start on the documentation for your Frederick MD mortgage lender will help you move through the process much more efficiently and quickly.


Contact Us for our list of preferred Frederick Md lenders. Chris Highland
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