Author: Dan Krell

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Planning to de-clutter

De-cluttering your home is not just reserved for a home sale. It’s also a bit more than just a thorough cleaning and putting away items that are not in use. You may already be overwhelmed by the thought of cleaning, but remember that if you prepare a realistic plan and stick to it, you will be finished before you know it.

When going through each room, decide which items are necessities and which items need to go. There are many items that you may decide are not necessary to keep, yet they are personal or sentimental. Professional home stagers talk about the idea of “depersonalization” when discussing de-cluttering. This means that the home should be “neutralized” so, rather than view your life and personalization, home buyers can have a vision of the home as their own. Keeping depersonalization in mind, decide which items need to go.

Remember that de-cluttering doesn’t necessarily mean that you dispose of everything you don’t need or want in your home. Many of your personal and sentimental items you wish to keep can be stored temporarily or for long periods of time. You can rent storage units of various sizes on a monthly basis, or you may decide to have a portable storage container delivered to your home. The portable storage container is a practical solution if many of the items that you’re pulling from your home will be used in your new home. Additionally, if you’re move is not immediate, the portable storage container can be transported by the company to storage until you’re ready to unload the container in your new home.

The items you decide that you no longer need or want can be donated, disposed of, or you might even decide to have a yard sale! If you have many items that need to be removed from your home, consider donating the items to a charity before throwing it all away. Since many charities vary on what is acceptable for donation, it’s a good idea to check with them before scheduling a pick up or dropping items off to their collection site.

Be careful when throwing items away; you may need to take precautions or make separate disposal plans for certain materials. Some items that cannot be picked up by the regular trash collection can be scheduled for pick up by the county or local municipality; or can be hauled to the local processing facility. If you’re unsure how to dispose of certain items, you can check with the Montgomery County Division of Solid Waste Services for facility hours and disposal/recycle procedures.

If you don’t have the time to haul your unwanted items on your own, you may decide to hire a hauling company. Charges to haul items away can vary depending on the company, as well as how they dispose of the items. Some haulers may drop everything to a county processing center, while some may sort your items either for donation or sale.

De-cluttering is the keystone to your home’s presentation. De-cluttering a home may sound laborious, but it doesn’t have to be if you have a realistic plan. If you’re unsure how to begin de-cluttering your home, you can check with your Realtor® or you can hire a Professional Organizer. The National Association of Professional Organizers (napo.net) maintains a national directory of Professional Organizers.

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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Can timing the real estate market help you get a better deal?

If you’re trying to time the market before buying or selling your home, you may decide to wait a little longer after hearing the recent housing data; however, you could also change your mind when you consider some recent research.

First, a recent housing report released May 8th by Zillow.com indicates further erosion of home values. According to Zillow.com’s chief economist Stan Humphries, home values continue to slide nationwide – except for the metro areas of Honolulu, HI (there was a slight increase in home values in March 2011 compared to the same time last year) and Pittsburgh, PA (where home values have been determined to be flat for the time period) (Zillow.com).

Even the Washington, DC metropolitan appears to have taken a hit. According to Zillow.com, area home values declined 0.5% in March 2011 compared to February 2011; and declined 7% in March 2011 compared to March 2010.

Humphries further stated that housing demand continues to be “fundamentally weak;” while housing supply is and will continue to be affected by distressed properties due to higher than normal delinquency rates (which are expected to continue into the near future).

Given the less than rosy picture of the housing market, those doubting the long term value of home ownership may continue to wait out the market. But a recent research article by Anderson & Harris (2010. Timing the market: You don’t have to be perfect. Real Estate Issues 35, (3) (10): 42-42-50) may indicate that you don’t have to be perfect when timing your purchase and sale of your home.

Anderson & Harris studied various strategies of purchasing and selling commercial real estate to determine if there is a significant difference in return. Their strategy simulation provided these results: the typical “buy and hold strategy” over a thirty year period results in an annualized return of 8.18%; however, buying when a recession has ended with a predetermined sale period yields a wide range of return that ranged from 13.38% to 1.42% annualized total return. Alternatively, timing your purchase and sale with the overall peaks and valleys of the market could be more effective than trying to be exact; although they concede that peaks and valleys are realized in hindsight.

Although their data analyzed commercial real estate investor behavior, the results may have implications for the housing market. As the data suggests, attempting to exactly time your purchase and sale can yield a wide range of unpredictable results; while a long term strategy appears to be more stable. Additionally, they caution that market timing can also be affected by macroeconomic factors as well as your personal financial picture; which can reverse positive returns, even if your timing was perfect.

Anderson & Harris’ data may indicate that attempting to time your purchase may not yield the results you might expect; long term home ownership can be as good, if not better, than speculating on the exact bottom or top of the housing market. Likewise, home sellers waiting for the housing market to rebound before making a move may be missing an opportunity as well.

Obviously, you should consult financial professionals before making any financial decision; as well as consulting a Realtor® to assist you in analyzing local and neighborhood sale data. However, if you’re trying to time the housing market, consider a long term approach before making your decision.

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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Do you want to boost your home’s curb appeal and attract home buyers?

A healthy lawn can boost your home’s curb appeal and possibly attract home buyers.

If you’re planning to list your home this spring, don’t forget to take care of your lawn. A healthy and properly groomed lawn can make your home more appealing and boost the home’s curb appeal.

Taking care of your yard doesn’t have to be overwhelming; after all it’s not rocket science. However, there is a science to fertilizing and mowing the lawn. Whether you decide to go it alone or hire a lawn care company, the Maryland Department of Agriculture (MDA) offers a guide to proper lawn maintenance and Maryland’s Nutrient Management Law to limit the impact to the environment (www.mda.state.md.us).

Great care must be taken when fertilizing your lawn. Improper use of fertilizer can not only affect the environment, it can also harm your family and pets as well. Fertilizer should be applied when the grass is growing, and be avoided when the grass is dormant. Fertilizer should not be applied when a heavy rainfall is forecasted, when the ground is frozen, or during a drought because it could cause unwanted runoff into the watershed. Because most residential lawns in Maryland are comprised of cool season grasses (which can grow throughout the year) the MDA recommends that the bulk of the fertilizer application be in the fall to help the lawn recover from “summer stresses.”

In addition to following MDA recommended fertilizing application, lawn maintenance also includes proper mowing. It is recommended that you not cut off more than one-third of the grass blade at any given time. Most experts suggest that the appropriate length for many of the cool season grasses is 2.5 to 3 inches. Following recommended mowing guidelines can reduce weed growth by 80%.

If you prefer to water your lawn, infrequent watering for long duration is recommended because frequent brief watering promotes shallow root growth as well as encouraging weeds. During hot and dry weather, however, your lawn could go dormant; lawn experts don’t recommend watering dormant grass.

Sometimes, aerating your lawn is a good idea; especially if your lawn has become compacted. Through the use of a specialized tool, air, water and nutrients are readily absorbed into the ground; which promotes grass root growth and strengthening.

If you’re concerned about dead or brown patches in your lawn, the repair may not be complicated; however the causes should be resolved prior to the repair. Some common causes of brown patches include (but not limited to) animal urine, drought, or inappropriate fertilizer/herbicide application.

If you prefer to hire a company to maintain their lawn, it’s ok. Many people are just too busy, or physically incapable of properly maintaining their yards. Before hiring a lawn care company, the MDA recommends you do your homework; ask for referrals and get at least three estimates. Make sure the companies are licensed with the MDA. Besides comparing costs, compare the services provided as well as the quality of the materials used. Once hired, make sure you point out environmentally sensitive areas and ask for advance notice of pesticide applications.

Taking proper care of your lawn can not only ensure a healthy green covering, but can also enhance your home’s curb appeal. However, following recommended guidelines as well as adhering to the Maryland Nutrient Management Law, you not only get a healthier lawn; you also minimize the environmental impact.

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’s the big deal about the Qualified Residential Mortgage anyway?

If you haven’t yet heard of the Qualified Residential Mortgage (QRM), you will soon. The QRM is one of the exemptions listed in SEC. 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (signed into law last year), which allows securitizers of residential mortgages to bypass the credit risk retention rule.

Securitizing is basically the grouping of mortgages into a security instrument (such as collateralized debt obligations or real estate mortgage investment conduit) and selling it on the secondary market. Mortgage securitization has had a long history in this country, and has impacted the housing market by creating various forms of mortgages and allowing many Americans to become home owners. However, if you recall, mortgage securitization was widely criticized as being one of the causes of the recent housing crash. The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted, in part, to address mortgage securitization practices.

SEC. 941 “Regulation Of Credit Risk Retention” of the “Act” requires a securitizer of residential mortgages to have skin in the game by retaining some of the risk of any asset or mortgage backed security that is sold, transferred, or conveyed. Additionally, the securitizer is prohibited from hedging or transferring their credit risk. Exceptions to this section include federal programs insuring or guaranteeing mortgages; which includes FHA and VA mortgages, as well as mortgages from institutions supervised by the Farm Credit Administration (including the Federal Agricultural Mortgage Corporation). However, Fannie Mae and Freddie Mac are not exempt.

An additional exception to SEC. 941, which would allow mortgage securitizers to bypass the risk retention rule, is the QRM. Although QRM rules have not yet been finalized, the rules have been proposed by government regulators- and yes, there has been a responsive uproar by many in the housing industry.

Proposed QRM rules include stringent credit score and debt-to-income ratio requirements, and a 20% down payment. The response by housing industry proponents has included press releases, letters, and numerous commentaries suggesting that if the proposed QRM rules are adopted, an already fragile housing market may experience further setbacks. It has been argued that rather than lowering mortgage interest rates and costs, many credit-worthy home buyers who do not have a 20% down payment will be forced to pay more for a mortgage or they may choose renting as an alternative to buying.

As proponents and critics of the QRM argue their perspectives, some could point to an opportunity to address mortgage securitization practices much earlier when the House of Representatives held hearings on predatory lending. In November 2003, the House Subcommittee on Housing and Community Opportunity and the Subcommittee on Financial Institutions and Consumer Credit held the “Hearing on Protecting Homeowners: Preventing Abusive Lending While Preserving Access to Credit.” Testimony provided discussed mortgage securitization and its role in an expanding credit market (specifically the subprime mortgage market), as well as the discussion of eliminating “unscrupulous” lending practices.

Regardless of higher down payments and stringent credit requirements of the QRM, the debate is only a sideline of the overall reform in housing and finance. As final rules and regulations are decided and put into place next year, the housing market as we know it could be vastly changed; but then again, the housing market might just continue along its current path seeking equilibrium.

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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Has the market hit bottom yet?

I have to admit that after offering definitively optimistic analyses about the housing market after the meltdown, I now answer housing market questions tentatively. The tentative answer is not for a lack of optimism (the local market has shown strength in the last year where other regions continue to languish at best); however current analyses are tentative because rather than making a decision to buy or sell a home strictly on the strength of the market, consumers also need to be aware of personal goals and preferences.

Sure, if you look at some of the housing market indicators, such as the S&P/Case Shiller Home Price Index and the National Association of Realtors® (NAR) existing home sale report, national data are conflicting and may not yet indicate a solid recovery (although the Washington, D.C. regional data has shown strength).

The last S&P/Case-Shiller Home Price Index (standardandpoors.com) data that was released March 29th indicated that national home prices have not fared well for January 2011. However, it must be pointed out that as home prices slid across most of the country, the Washington, D.C. region’s home prices revealed an annual increase of 3.6%.

The NAR’s February existing home sale report released March 21st indicated a further decline for the number of homes that sold compared to the same time the previous year. However, the Washington, D.C. region was reported to have increased in home sales but decreased in home prices compared to the same time the previous year. We are anxiously waiting for this month’s report, which is scheduled to be released this week (realtor.org).

Additionally, the April NAHB/Wells Fargo Home Market Index (HMI) fell to 16; as reported in the April 18th press release by the National Association of Home Builders (nahb.org). The HMI is a scale from 0 to 100 that rates builder sentiment across the country (the lowest index reported was 9 in 2009; the highest index was 77 reported in the late 1990’s). NAHB Chairman Bob Nielsen was reported as saying in the press release, “While builders in some areas are starting to see a pickup in traffic of prospective home buyers, many consumers remain skittish about the health of the housing market and overall economy, particularly in view of recent legislative and regulatory proposals that could make it much harder to get a mortgage…”

Economists and other housing experts remain conflicted about sources for the continued issues facing the national housing market. Some point to continued problems with distressed home sales, which include foreclosures and short sales; while others continue to point to unemployment. The reality is that these economic factors are just a part of a larger puzzle. Other economic forces that can affect consumer sentiment and the housing market can range from mortgage regulation (as recognized by Bob Neilson of the NAHB) all the way to energy shocks and policy (one of Shell’s energy scenarios named “Scramble” predicts major global economic difficulties as early as 2020 unless serious energy policies are undertaken).

Has the housing market bottomed out? Macro-economic factors may indicate that housing could continue to manifest symptoms of a labile global economy; while micro-economic factors might indicate a completely different picture. For someone contemplating buying or selling a home, the answer is probably more of a personal reflection combined with local and hyper-local housing data.

By Dan Krell Copyright © 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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