Author: Dan Krell

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The challenges of selling a home while divorcing

Of the many challenges you might face while going through divorce, having to leave your home is not only emotionally disruptive, but has the potential to create short term havoc as well. Imagine not only having to pack and move your personal possessions, but also having to cater to strangers traipsing through your home on a regular basis.

Because selling a home during divorce can sometimes offers additional pitfalls, choosing the correct Realtor® as well as arranging a thorough home sale agreement with your ex-spouse may minimize the emotional stress and grief, as well as possibly avoiding additional conflict. As always, I need to remind you that I am not an attorney, and if you’re going through or thinking of separation/divorce, consult your attorney for legal counsel.

Of course you want to choose a listing agent with sharp real estate acumen. However, consider additional agent attributes such as facilitator, active listener, as well as being discreet. Most top real estate agents are good facilitators, being able to move a transaction from an offer to close; but in a divorce situation, the listing agent should not only address the buyers side in negotiation, the agent needs to be able to facilitate the transaction by bringing both ex-spouses together.

In what may seem to be a skill that is scarce these days, active listening is not only hearing what you may have to say but is demonstrating you are understood. Not unlike a counselor, the agent with active listening skills is able to recap a conversation and be able to actively address your concerns during the home sale.

To thwart unwanted lowball offers, the listing agent must be also be discreet. Home buyers may sometimes mistakenly equate a divorce related home sale with a distressed property, and subsequently present an offer that is below market pricing. Additionally, the listing agent must remember that they have a fiduciary responsibility when representing all the sellers of the property and not should not favor one side or attempt to cram offers through.

Having a thorough home sale agreement prior to listing is not always realistic, it’s not unusual for an agreement to be reached after the sale. However, giving consideration to other sale related issues in addition to disbursing the sale proceeds can facilitate a sale. To assist in making your transaction and transition smoother, consider the disbursement of escrow accounts, payment of left over bills, property damage and removal of your spouse’s possessions.

The mortgage and water bill escrows are sometimes forgotten during a divorce sale. When your mortgage is paid off, the mortgage company will refund any remainder of the escrow account that was used to pay your insurance and property tax. Additionally, the remainder of the escrow that is collected at settlement to pay the final water bill must be disbursed as well.

An ex-spouse’s personal property can sometimes linger, making the home appear cluttered and creating challenges to staging. Arranging to remove personal property prior to listing may assist in showing the home at its best. Additionally, agreements as how to handle escrow shortages and any property damage that occurs prior to settlement may also prevent potential closing issues and delays.

Although proactively arranging for all pitfalls in the divorce sale is not always realistic, consulting with your attorney can help you navigate through the obstacles.

by Dan Krell
© 2011

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.

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Preparing an open house for welcome and unwelcome visitors

In a time when home buyers and their agents are increasingly using online services to search for homes, some question the value of holding an open house. However, holding an open house provides the opportunity for both welcome and unwelcome visitors to experience what your home has to offer.

Of course, the wanted visitors include home buyers and their real estate agents. The National Association of Realtors® Profile of Home Buyers and Sellers 2010 (NAR, Washington, DC; Realtor.org) indicates that about 10% of home buyers in 2010 reported finding their home via an open house visit. And although the number of home buyers finding their home by means of visiting open houses has decreased from the 16% that reported in 2004, many home buyers reported that they use open houses as a means of information gathering. Of those home buyers who used the internet for their home search, 47% also visited open houses as an additional source of information.

Although preparing for an open house should not be too much work, since most of your preparation should have been completed prior to listing your home, time should be taken to offer your visitors a memorable home. No matter how much de-cluttering you have undertaken prior to listing your home, getting ready for an open house offers the opportunity to focus on the details.

Attention to the home’s curb appeal can make the difference between having home buyers driving by and having them stop to come inside. No amount of advertising can overcome a home with poor curb appeal; remember that your home’s exterior and yard is like the opening chapter of a story that should be engaging to home buyers.

When cleaning your home, look for trip hazards. Trip hazards can turn the promise of an open house into a potential disaster. Of course, visitors should be informed of home features that present trip hazards, such as irregular stairs and uneven floors. However, other trip hazards are sometimes created by the virtue of an open house: think twice before asking visitors to remove their shoes, as walking around in socks can be quite slippery on bare floors and stairs; new rugs should be secured so they do not slip from under your visitors’ feet.

Certainly cleaning and dusting the home is a given; but since home buyers often find strong odors a turn-off, consideration should be given to odors and their sources. Odors that emanate from such sources as pets, cooking, and even your cologne and perfumes can often linger throughout the day- and sometimes trigger an allergic reaction from a home buyer.

Now to the unwanted traffic: Besides cleaning your home, take precautions to protect your valuables and prescription medications. Every year there seems to be an outbreak of open house thievery somewhere in the country. Think twice before showing off your new flat screen or computer, or laying out the fine china for staging. Thieves can easily visit an open house to not only see what they can fit into their pockets, but to “take inventory” of your valuables for a later score when no one is home. And it’s not always jewelry and cash- some thieves look for prescription drugs that are easily pocketed during their visit.

Your Realtor® can assist you in making your open house successful; prepare equally for the welcome and unwelcomed guests.

by Dan Krell
© 2011

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.

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The internet: a catalyst for change between real estate agents and their clients

Have you ever thought of how the internet has changed your personal relationships? Before the proliferation of social media on the internet, you may have related to your friends and family much differently than you do today. Whether you know it or not, your relationship with businesses has also changed; banking and shopping seem to be mostly initiated on the internet. And, of course, the internet has changed your relationship with your real estate agent.

Before public use of the internet was commonplace, real estate agents mostly met with their clients in person to review available home listings. Although many used the technology of the day (fax machine and telephone), a face-to-face meeting was still a necessity. As the internet flourished, early adaptations allowed real estate agents to correspond with clients via email (of course those who were sophisticated enough to have an email account).

As the internet evolved, so too did the business of real estate. And while surfing the internet became a regular daily routine (like your morning coffee); MLS services, Realtor® Associations, brokers and real estate agents all tried to capitalize on the latest technologies to capture business.

One could even try to make the argument that technology and the internet was an enabler of a real bubble that would eventually pop. Because house-hungry buyers wanted to be the first know about new listings and be able to present their offer before anyone else, internet applications were developed to adapt to that market need; internet applications were touted to automatically send listing alerts to buyers’ emails and cell phones. The increased use of mobile technologies such as texting and SMS, along with the ability to surf the internet on the cell phone allowed buyers to search homes anytime/anywhere. Tech savvy buyers could not only get notice of a new listing almost immediately, but they could also send an offer to the listing agent without ever leaving their chair!

Of course, many who hastily bought without inspections (or worse- sight unseen), realized that the internet was not a substitution for visiting the home and doing due diligence. The internet has since grown to become the leading source for real estate related information. What was once ballyhooed as the means of procuring clients is now realized as a tool to augment client relationships.

Certainly, the internet has not yet become the replacement for human interaction in real estate transactions. However, for better and worse, the maturing internet has impacted the relationship between the real estate agent and their client. Where at one time, the public solely relied on real estate agents for information; the public now relies on their real estate agent for specialized information and increased personal service. The business of real estate has shifted from selling the idea that real estate agents had the listings and all the related information, to not only selling personal and specialized services to facilitate the real estate transaction – but to assist the public in understanding the overwhelming barrage of data and information by providing meaningful interpretation and implementation.

Much like the effects to other financial industries, the internet has not totally replaced human interaction; but instead has changed relationships. At one time the internet was thought to become the virtual revolution; but in actuality has forced the real estate industry and agents to rethink their function and relationship with their clients.

by Dan Krell
© 2011

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.

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What do visitability, foreclosure, and agency have in common?

Since the 428th session of the Maryland General Assembly ended Aprill 11th, have you read the “90 Day Report: A Review of the 2011Legislative Session” (mlis.state.md.us)? Many bills that affect real estate transactions as well as homeowners and those involved in the industry have been passed (and of course, many were defeated or not passed). Among the many new laws passed during the 428th legislative session, here are a few highlights.

The international movement which advocates for construction practices for the mobility impaired has taken hold in Maryland. HB437 requires home builders to offer “minimum” visitability features in new homes. The new law applies for new developments of 11 homes or more that receive preliminary approval on or after October 1st, 2011.

“’Minimum visitability features’ are defined as (1) a ground level entrance meeting specified height, width, and accessibility characteristics; and (2) a circulation route from the ground level entrance to an unattached garage, parking space, or public right-of-way that is free of specified impediments or vertical changes in levels greater than 1.5 inches. The builder must provide (1) a point of sale document describing the minimum visitability features; and (2) a drawing or photograph showing these features as well as the lots and new home types that are conducive to the construction of these features.”

If you plan to purchase a foreclosure in the near future, take note: HB842/SB516 indicates that you cannot begin to collect rent from a remaining tenant until you provide notice. As of July 1st a purchaser of a foreclosed property cannot collect rent unless they have: “1) conducted a reasonable inquiry into the property’s occupancy status and whether any individual in possession is a bona fide tenant; and 2) served on each bona fide tenant, by first-class mail with a certificate of mailing, a notice containing the contact information of the purchaser or the purchaser’s agent responsible for managing and maintaining the property and stating that the tenant must direct rent payments to this person.” You can claim rent up to 15 days immediately prior to satisfying the notice requirements.

If your real estate agent is part of a real estate team, there is a chance that a real estate agent of the same team will represent the other party of the transaction, provided that the appropriate disclosures are provided and all parties agree. Currently, only the team’s broker can assign two team members to represent a buyer and seller of the same transaction. Beginning October 1st, HB1049 will also allow a designee of the team’s broker to appoint team members to the same transaction, provided that the broker designee is not a member of that team.

To add teeth to the Commissioner of Financial Regulation’s enforcement of Maryland’s Protection of Homeowners in Foreclosure Act and the Maryland Mortgage Fraud Protection Act, HB509 (an emergency bill that went into effect earlier this year) clarifies the authority of the Commissioner of Financial Regulation, as well as clarifying a homeowner’s ability to seek damages. The Commissioner is authorized by this legislation “ to enforce these Acts by exercising any of the commissioner’s general enforcement powers, seeking an injunction, or requiring a violator to take affirmative action to correct a violation, including the restitution of money or property to any person aggrieved by the violation.” Additionally, a homeowner can seek damages as a result of a violation of the MPHIFA and MMFPA, regardless of the status of administrative actions or criminal prosecution of the offender.

by Dan Krell
© 2011

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.

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Expensive mortgages on the horizon

Owning a home takes work. Soon, it will cost more too. In response to a crippling financial crisis, sweeping changes were established in the mortgage industry to not only stabilize the crippled financial sector of the housing market, but to also to temporarily provide access to credit in an all but frozen credit market. Now that the temporary stop gaps are coming to an end, will private investors make home mortgages more expensive or will Congress bow to housing trade groups to extend current interventions?

Since the increase of FHA mortgage down payments to 3.5% a few years ago, there has been talk of increasing it further to 5%. The move comes at a time when mortgage assistance programs are winding down and reliance on FHA mortgages to refinance underwater home owners is diminishing. Concerns over FHA reserves prompted higher annual FHA mortgage insurance premiums and, of course, also elicited calls to increase FHA mortgage down payments to 5%.

Of course, while some look for a solid FHA mortgage down payment increase, some look to future decreases. H.R. 1977: FHA Reform Act of 2011 (introduced May 24th which has been currently referred to committee) creates the position of “Deputy Assistant Secretary of FHA for Risk Management and Regulatory Affairs,” whose job would be, among other things, to review down payment requirements.

Besides the push for increased FHA down payments, the FHA maximum loan amount is set to decrease in October of this year. Temporarily increased to $729,750, FHA loan limits will revert to those set by the Housing and Economic Recovery Act of 2008 (HERA). Unless Congress acts on maintaining the current FHA loan limits, HUD states that 669 of the 3,334 counties or county equivalents that are eligible for FHA insured mortgages will be affected. In “high cost” areas, such as Montgomery County, the maximum FHA loan limit will be reduced to $625,500 (“Potential Changes to FHA Single-Family Loan Limits…A Market Analysis Brief; hud.gov).

In addition to changes in FHA mortgages, conforming loans (mortgages that conform to Fannie Mae and Freddie Mac guidelines) will also change. October 2011 is also when the maximum conforming loan limits will revert to those established by HERA, as stated in a May 26th release from the Federal Housing Finance Agency (FHFA is the oversight agency for Fannie Mae, Freddie Mac, and Federal Home Loan Banks). Although the new loan limit will not differ from the current amount in a majority of regions, FHFA estimates that 250 counties or county equivalents will be affected. The maximum conforming loan limit for “high cost” areas, such as Montgomery County, will also be reduced to $625,500.

Although the current FHA and conforming loan limits were temporary, housing trade associations have warned about possible effects of reverting to lower mortgage limits on an unstable real estate market. Both the National Association of Realtors and National Association of Home Builders have commented on the imminent changes and have called on Congress to make the temporary changes permanent.http://www.blogger.com/img/blank.gif

Recent government interventions in the housing market may have been necessary but they were intended to be temporary. Continued intervention may continue to allow “lower cost” mortgages for some home buyers, but some have warned against maintaining the temporary stop gaps because it hinders private investors from entering the housing market as well as the possibility of artificially inflating housing prices.

by Dan Krell
©2011

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.

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