Is now the time to buy a home?


by Dan Krell © 2010

Today’s economy has a lot of people worried about buying a home. So much so that many would-be home buyers continue to sit it out. However, there are home buyers who are jumping into the market because they feel there is value in home ownership regardless of the economy.

So, is it a good time to buy a home? The answer, of course, depends on your circumstances. However, the basic indicators reveal we are at a time when the combination of historically low mortgage rates and low home prices provide an opportunity not only for real estate investors but for home buyers as well.

First, I’m sure you’ve heard that mortgage rates are at historic lows. Yes it is true that many economists forecasted that mortgage rates would increase through 2010 due to an anticipated global economic recovery. However, many now have conceded that the recovery has stalled; the rudimentary explanation is that economic concerns abroad have affected a domestic recovery. Additional economic pressures and volatile markets continue to suppress mortgage rates, such that it has sparked a new refinancing boom.

Second, home prices remain low. Even though the recent S&P/Case-Shiller Home Price Indices (standardandpoors.com) reveal home price increases in fifteen of the twenty composite cities (including the Washing DC metropolitan area) for what may seem to be the first quarter of gains this year, economists remain cautious in saying there is a housing recovery. As median home prices continue to remain relatively low, the National Association of Realtors Home Affordability Index (Realtor.org) indicates that homes continue to be as affordable as they have been in recent years.

Third, the Trulia Rent vs. Buy Index (truliablog.com) indicates that the Baltimore – Washington area rates relatively low in the index (meaning the costs of owning a home is less than renting). The Rent vs. Buy argument has always been hotly debated, even at the height of the seller’s market. There are those who will always say home ownership is more costly than renting (I suppose a broken watch is right twice a day); and let’s face it, home ownership is not for everyone. If you’re questioning the rent vs. buy issue, you can compare rent vs. buy via a “rent calculator” (available on various places on the internet) comparing the costs of home ownership as compared to renting.

Regardless where the housing indicators point, many home buyers are aware of and believe in the intangible advantages of owning a home.

Additionally, some financial talking heads are now talking about these housing indices and touting real estate as an alternative to volatile markets. Even the venerable Stuart Varney has recently been heard saying that buying a home is smart. (Of course I have to provide a disclaimer that I am not offering financial advice and you should consult the usual suspects of professionals and financial experts before you invest in real estate).

The American Dream of home ownership is not dead; it has just been on hiatus. Working hard to save money for a down payment to purchase your own home is on a comeback. And unlike some who might have you believe that buying a home is a “false economy,” those who know genuine value will always look to own their own home regardless of the economy.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 16, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

Truth in advertising: When selling your home, advertise the truth

by Dan Krell © 2010

It is often said that the truth shall set you free, but the truth may also help you sell your home. You might think I’m talking about disclosing material facts (which you should always do), but actually I am referring to how you describe and advertise your home. Accurately describing your home and providing truthful photos may attract actual home buyers who are searching for a home just like yours.

Descriptions of your home in the MLS and other advertisements, as well as photos, are designed to attract home buyers who are searching for the specific features of your home. Home buyers may be attracted by the message you send them, however they will only buy the home that meets their criteria.

You see, searching for homes on the internet is akin to internet dating. Just like internet dating, you want to put your best foot forward. You want the photos to be attractive and your description to be tantalizing. However, distorting photos (or posting photos that are ten or twenty years old) as well as exaggerating your description will most likely make people angry for deceiving them. If you portray your home as something it is not, you are certain to upset home buyers and agents for wasting their time.

Because of its convenience, online virtual tours have become one of the main tools that home buyers use to choose what homes to view in person. As you might imagine, some agents and home sellers are tempted to use digital photo programs to make the homes look better on the internet. Using the “pinch” function to make rooms look larger, they may feel as if they are doing minor photo “touch ups”; but in actuality they may distort what the home looks like. In extreme scenarios, they may cover-up material facts about the home.

Consider telling the truth. For example, if your home is very well maintained but hasn’t been updated since Ronald Reagan was in the White House, then you might consider describing the condition and maintenance of the home rather than saying the home has “updates.” Think about listing the actual number of bedrooms in the home as opposed to listing the number of potential bedrooms if the basement was finished. Additionally, if a queen size bed fits comfortably in the master bedroom; don’t distort the photo to make the bed appear to be a California king size!

If you’re frustrated by having your home on the market for what may seem to be a long time and your home is priced correctly, reconsider how your home is portrayed to home buyers before making a price change (over-pricing your home is a separate issue). Many agents seek price changes as a means to a quick sale; however before lowering the price, have a chat with your agent about how they are describing the home and consider re-taking photos.

Home sellers with whom I have consulted have had positive results once they realized the message they were trying to send to home buyers was not congruent with their home’s characteristics. Remember, a hog in a tuxedo is still a hog; don’t make the home out to be something it is not just to attract home buyers.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 9, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

Pearls Before Swine


Whoever said real estate is about location was wrong; it’s about relationships. One of the most rewarding aspects of being a real estate agent is meeting lots of people and creating many good friendships. However, any real estate agent will tell you that there are many times this industry can weigh you down and wear you out; many times there’s a feeling as if I am casting pearls before swine.

About eight years ago, I stumbled upon a comic strip called “Pearls Before Swine” (http://comics.com/pearls_before_swine), created by Stephan Pastis (http://www.facebook.com/stephan.pastis#/pages/Stephan-Pastis/132583843763). I have found that it’s exaggeration of human traits as portrayed by animals help put things in perspective in this bizzaro world in which we live as well as help maintain a little sanity (it’s kind of like a very edgy George Orwell’s “Animal Farm”). If you are unfamiliar with the comic, the main characters are a rat and a pig whose personalities are polar opposites; Rat is irascible, and Pig is selfless and naïve.

My inner Pig says, “Thanks Stephan!” My inner Rat is gagging over Pig’s sweetness, while shaking his head and thinking, “we’re doomed.”

If you have read the comic, then you know what I’m talking about. If you enjoy Pearls, please help the world smile a little more each day by contacting your local paper to let them know how much you enjoy the comic!

(Ok, Stephan- please call off the duck!)

This article is not intended to provide nor should it be relied upon for legal and financial advice. No Zebras were harmed while writing this post (sorry Larry). Copyright © 2010 Dan Krell.

New laws affecting homeowners and homebuyers

Are you curious about new laws that may affect you as a home owner or home buyer? Now that the State legislative session is over, we can pour over the many bills affecting real estate. Some of the bills, such as a state home buyer tax credit, did not pass; however, there were many that did pass. Of the many that passed, here are the highlights:

Earlier this year, a transfer tax controversy stirred surrounding the decision by several local Maryland counties to collect transfer taxes on the forgiven mortgage amounts in short sales. In response to the controversy, Attorney General Gansler provided an opinion that temporarily deferred the contentious transfer tax collection. HB590 clarified the issue when it was signed into law on May 10th 2010, indicating that transfer taxes may not be collected on forgiven mortgage amounts in a short sale.

Low income residents who depend on the Maryland Homeowners’ Property Tax Credit program will find that the assessment limit will be raised from $300,000 to $450,000 (for tax years beginning after June 30, 2010). The tax credit program that has been around since 1975 limits the property tax paid depending on applicants’ income levels.

Federal employees who are stationed abroad get a break through an extension of the Maryland homestead credit. Normally, a home owner must reside in the home to receive the credit; however, HB 199 extends the Maryland homestead credit for federal employees who are stationed outside of Maryland. Effective for the tax year beginning after June 30th, 2010, the time limit to claim the homestead credit while outside of Maryland is six years.

Beginning October 1st, 2010, real estate sales contracts will be required to inform home buyers they have the opportunity to appeal the tax assessment on their new home. To appeal, the home purchase must be between January 1st and July 1st and must be made within the first sixty days of ownership.

Home owners in foreclosure are provided additional assistance through the new foreclosure mediation law (HB 472). The law that became effective July 1st, 2010 is supposed to give homeowners additional time and support to seek foreclosure relief by allowing a mediator assist the process. When lenders notify home owners of default, lenders are required to provide home owners foreclosure alternatives (such as lender and government mortgage modification programs). Before foreclosing, lenders are required to file affidavits describing foreclosure alternatives provided to the home owner as well as an opportunity for the home owner to “opt in” for foreclosure mediation.

Tenants residing in foreclosed homes are now extended additional protection under Maryland law. In addition to the notice that is required to be provided, HB 711 allows the tenant living in a foreclosed home an additional ninety day lease extension beyond the foreclosure sale. The law became effective June 1st.

Home owners filing bankruptcy later this year will have an increased homestead exemption, thanks to the passing of HB 456. Effective October 1st, the Maryland homestead exemption will now be equal to the federal exemption. The exemption can only be used for owner occupied properties and cannot be claimed by both husband and wife in the same proceedings.

Other new laws affecting real estate (ownership, transactions, etc) can be viewed on the “Legislative Wrap Up” of the Maryland Legislature.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

by Dan Krell. Copyright © 2010 Dan Krell.

Appealing your property taxes; verify licenses of companies soliciting you

by Dan Krell © 2010

Since the decline of the housing market, many home owners have appealed their property tax assessments. The appeals process is straightforward and is laid out on the Assessments and Taxation website: www.dat.state.md.us/sdatweb/appeal.html.

The appeal process can be broken down in several discrete steps. The important thing to keep in mind is the filing deadlines; however, if you miss one deadline you can file during the subsequent cycle.

There are three times you can file an appeal; upon re-assessment; upon purchase; and you can petition for a review. Since homes are assessed every three years, you can file an appeal within 45 days of receiving the assessment notice. If you’re a new home owner, you have 60 days from the day you take title to file your appeal, but only if you settle between January 1st and July 1st. If you miss these deadlines or you feel that conditions have changed such that your home value has decreased between assessments, you can file a petition for a review before January 1st.

To be most effective authorities recommend that you: stay focused on what affects your property value; provide reasoning why the “Total New Market Value” is not accurate; point out errors on the assessment worksheet and/or in the description of the home; support your appeal with recent sales comparables.

The first step of the appeals process is called the “Supervisor Level.” This is where you will meet with a local level official to present your case. It is recommended that you obtain local sales information to support your case, which can be obtained from various sources such as (but not limited to) a library, public records, or a local real estate agent. For a nominal fee, the assessment office offers worksheets listing comparable properties. At this level, you basically present your evidence as to why the department’s assessment is inaccurate.

If you’re unsatisfied with the initial decision, step two is to file an appeal to the Property Tax Appeal Board. The appeal to the PTAB must be filed within 30 days of the final notice from the Supervisor of Assessments.

If the PTAB decision does not satisfy you, step three is taking your appeal to the Maryland Tax Court. If you’re not content with the MTC’s decision, you can file further appeals; however further appeals must be in the judiciary system (and it is recommended you hire an attorney).

Even though the property tax appeals process is straight forward, there are companies that will assist you in your tax assessment appeal for an upfront fee. Although the tax assessment appeals industry has been around for many years, it has mostly been focused on more complicated and business related tax issues. Some of the tax appeal business newcomers have organized in the last couple years and target homeowners; some operate through recruited “affiliates” who make referrals for a fee. Furthermore, some of these businesses lack appropriate licenses and offer nothing more than information that is already publicly available.

Many homeowners successfully undertake the appeals process on their own; however if you choose to employ someone to assist you, ask questions about their business as well as check if they’re licensed and reputable. Licensing can be verified through the Maryland Department of Labor, Licensing and Regulation; other concerns can be cleared through the Office of Consumer Protection.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of July 26, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.