Chevy Chase MD Archives - Page 3 of 6 - Real Estate News and Commentary

August 21, 2007October 5, 2019

Why Litigate when you can Mediate?

by Dan Krell

You may find it odd that a Realtor is talking about mediation; after all I am not an attorney. Although a majority of real estate transactions close without incident, many are very happy endings indeed (no pun intended); disputes do arise.

Many disputes between home buyers and home sellers get resolved through normal lines of communication. However, communications can break down and a resolution far off.

If you do have a real estate dispute of any kind, please consult your attorney. But before you sue in court, discuss mediation with your attorney an alternative vehicle to resolve your dispute.

For those who don’t know, mediation is a process of bringing the parties together in an attempt to communicate differences and reach an agreement through a trained and neutral third party (the mediator). The mediator does not make judgment nor does the mediator pass any binding decisions. The mediator is trained in special techniques to facilitate the process of mediation.

The Maryland Association of Realtors (MAR) describes the benefits of mediation as follows (MDRealtor.org): mediation is faster than litigation, as litigation can take as long as several years for resolution while mediation can take as long as sixty days; mediation is less expensive than litigation as both parties split the cost and no one pays an excessive amount; mediation is non-adversarial and focuses on a win-win result, while litigation focuses on the disagreement and has a win-lose outcome; mediation results in an agreement that is mutually agreed upon by the parties;

Another benefit is that the parties who decide to pursue mediation retain the right to use other legal remedies. If mediation does not work the parties involved can pursue arbitration or litigation as if the mediation never took place.

Although mediation is not appropriate for every situation, common disputes that have been successfully resolved through mediation include repair and inspection issues, costs for repairs, missing fixtures, earnest money deposits, and claims of misrepresentation about property and appliance condition. Certainly, criminal allegations should be pursued by legal means not through mediation. Similarly, unethical behavior by Realtors should be referred to the real estate commission.

As a service to consumers, the MAR offers mediation as a means to resolve real estate disputes in Maryland. The MAR has established uniform procedural guidelines to maintain standardization and homogeneity in the process. These guidelines can be obtained through the MAR Mediation Service Provider, as indicated by the MAR.

Before mediation begins, the parties must have a written agreement to mediate. The agreement can be signed before or after disputes may arise. In fact, if you use the MAR purchase contract, there is a clause that states you agree to try mediation before litigation as means to resolve any dispute that arises from the transaction.

The next step is to submit the potential disputes to mediate and have a mediator selected. Although the mediator is selected by the mediation service, all parties involved must agree to the selection. All mediation sessions are typically held in the county where the dispute arose and are private and confidential.

I was once told that litigation results in unhappy parties regardless of the result. As a faster and inexpensive alternative, mediation is a means to resolve real estate related disputes agreeably.

This column 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 June 11, 2007. Copyright © 2007 Dan Krell.

June 24, 2007November 23, 2021

Condo Craze or Just a Phase?

by Dan Krell © 2007
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When you think of a condo, what may come to mind is the typical flat in a building. However, condos come in many shapes and sizes, including duplexes, townhomes and semi-detached homes. The term condo is actually in reference to ownership, rather than style of home. Condominium ownership means that your home is part of a condominium association that owns and maintains common areas, while you own the interior space of your unit. The common areas typically include the building exterior and common grounds as well as amenities, such as a pool or play ground.

Everyone in who owns a unit in the association pays a fee, typically monthly, for maintenance costs. Condo fees vary depending on the size of the association, types of amenities, and whether or not utilities are included.

For some, living in a condo offers convenience and worry free living that a single family home does not. Many condos developments are convenient to the amenities of downtown areas, such as Rockville, Bethesda, Gaithersburg, and Silver Spring. These homes can be close to metro too, reducing your need to drive a car. Additionally condo ownership typically means that you don’t have to concern yourself with mowing a lawn or repairing a roof, as the association takes responsibility for these things.

Condo living is an affordable opportunity to owning a home. Compared to single family homes and townhomes, condos tend to be less expensive and a viable option for many first time homeowners.

There is a downside to condo ownership, however. Although condos may be more affordable, history suggests that they do not appreciate as fast as other types of homes. Because some condo buildings appear densely populated, some neighbors can be noisy. Additionally, the level of maintenance may vary depending on the condo association and management company.

If you are considering purchasing a condo, here are some ideas to assist you. First, exercise your right under Maryland law to review the condo docs. The condo docs include the association rules and bylaws as well as a recent budget, which includes reserve funds for emergencies. Reviewing the condo docs can reveal rules that may impact your lifestyle, such as having a pet. Additionally, the budget and reserves can reveal how well the association manages condo funds.

If you have an opportunity, attend a board meeting to get a feel for what is happening within the association. Internal politics can impact the way the condo is managed. If you want to have input in the direction of the condo association, get involved with the association board.

Although the condo association has an insurance policy that covers the physical building, you may want to consider a policy to cover your possessions inside your unit.

Parking in your development can be easy or it could be a problem. You may have one or two reserved spaces for your unit. However, if your condo is convenient to metro or other amenities, you may find non-residents taking advantage of this.

No matter how you look at it, purchasing a condo can be a practical and affordable home for any home buyer. As there are many considerations when purchasing a condo, ask your Realtor for additional resources and ideas in helping you decide on the best home.

June 6, 2007October 5, 2019

Fair Housing Month 2007

by Dan Krell

April is finally here, which means spring is around the corner and we celebrate another Fair Housing Month. When you think of Fair Housing Month, thoughts of celebrating equality among the diverse come to mind. This year, however, people are talking about the recent sub-prime mortgage meltdown as an indicator of how we are doing in promoting equality and fairness in real estate.

At first you might find it difficult to fathom how lending practices and fair housing go hand in hand. After all, isn’t mortgage lending a highly regulated industry? Aren’t lenders using exacting rules to qualify home buyers for mortgages?

The mortgage industry is vigilant in maintaining strict quality control standards as well as cracking down on abuses such as fraud. However, the saying “where there is a will, there is a way” holds true. There are unscrupulous people who continually scheme to make their fortune through blatant mortgage fraud and other dishonest practices.

Although there are new schemes that pop up every year, most schemes involve the use of straw buyers (fraudulent using another person’s information to obtain a mortgage), giving false information, and/or providing manufactured financial documents to obtain mortgage funding. Fortunately these folks get caught and end up in jail.

Another problem that contributes to issues in the mortgage industry is the forcing of clients to use a specific lender for a kickback (violating federal law). When this happens, it is common for the consumer to pay excessive fees, points, as well as having a higher than average interest rate.

Mortgage schemes like these are just a sample of lending abuses that occur. In addition to other predatory lending practices, all lending abuse preys on an uninformed consumer. Perusing the Mortgage Fraud Blog (mortgagefraudblog.com) you overwhelmingly get an idea of the extent of the problem.

Why talk about mortgage lending practices, predatory lending, and mortgage fraud during Fair Housing Month? The reason is that many of the abuses that occur in the lending industry are due to the targeting of certain classes or sub-classes of home buyers.

The problem does not lie with the mortgage industry per se. The problem extends from the lending industry to other professionals involved in the real estate transaction. If the settlement agent or Realtor is not already aware of the abuse, they may turn a blind eye when they become aware at settlement when they review the closing documents. If the home buyer catches on to the high fees and interest rate, they are sometimes guaranteed a refinance in a couple months by their Realtor or settlement agent (which is a common predatory lending practice).

Like many things in life, it’s not the tool; however, it is the tool’s abuse by the ill intentioned or uncaring that produces disrepute. It needs to be said that Sub-prime and interest only mortgages are needed and can be useful tools in the purchase of real estate. However these tools need to be used responsibly. A guide to mortgages and other consumer information can be found on the National Association of Realtors website (www.realtor.org/housopp.nsf).

This Fair Housing Month, let’s just not commit to practice fair housing, rather let’s assist others to practice fair housing by not turning a blind eye to their lapses.

May 16, 2007October 5, 2019

The Market Forecast for 2007 and Beyond

The first quarter of 2007 is almost at an end. Tax returns are due in a few weeks. Spring Training has begun. And the spring real estate market is in full swing. Or is it?

Yes and no. Home buyers are looking. However, many of the homes that have languished on the market through the winter are still unsold, or have gone under contract at greatly reduced prices. If this is happening now, what are we to expect in the future?

Looking back to 2006 we all agree the market slowed down a bit and almost to a stand still by winter. Although it was a sluggish year, the National Association of Realtors considered 2006 to be a respectable year. Looking at the numbers nationwide, it was indeed a respectable year. Although existing home sales decreased 8.4% last year, it was the third best year on record for such sales. Additionally, new home sales decreased 17.3% and recorded the fourth best year on record for new home sales. Believe it or not, the NAR reports that homes prices increased nationally 1.1% for 2006, which is a record thirty-nine consecutive years of home price gains.

For 2007, the NAR forecasts a year much like last. Existing home sales will be consistent, but not as strong as last year, while there will be a slight increase in home prices. It is uncertain, however, how new home sales will manage (Realtor.org).

Fortune’s picture for the immediate area isn’t as rosy. Their December 21, 2006 forecast of home prices for the Washington area predicts a decrease of 3.8% in 2007 and 3.2% decrease in 2008. The forecast for the Bethesda-Gaithersburg region predicts a 2.7% decrease in 2007 and 4.3% decrease in 2008.

As a whole, economic forecasts point to a stable economy with stable employment and minimal to moderate growth. As you can imagine, many reports indicate that housing will continue to be a burden on the national economy. Reports predict that the burden will continue, however, through mid year 2007 and remain stable through 2008.

Prognosticators projected that the spring market for 2006 would be business as usual. Locally, the market preformed inconsistently. The spring market for 2007 will be inconsistent as well. As the local real estate market attempts to find its balance the market will continue to be slow through spring. Unless there is a major disaster, the sales pace will pick up in May as the market levels off.

Contributing to the continued lethargy is the fallout in the sub-prime mortgage industry. The tightening of credit guidelines due to over zealous speculators in the secondary mortgage markets has recently reduced the already shrunken pool of home buyers. Like most market commodities, investors will one day again find their appetite for sub-prime mortgages.

Home prices will continue to adjust, having an effect of tightening the available housing inventory. As many home sellers are already offering their homes at a break-even price, some home sellers will find that they cannot afford to sell as they would lose money on the sale effectively taking them out of the market.

By the end of the summer 2007, the effect of a tightening market will bring about the balance that we have been waiting for – hopefully.

May 16, 2007October 5, 2019

How to Make Your Property Tax Appealing

Many homeowners received their new tax assessments this past year. As they opened the official envelopes with much trepidation, many were in disbelief in the increase in property tax. As home values skyrocketed the last few years, so did tax bills. If you have recently received or are anticipating receiving a new assessment this year, you have the opportunity to exercise your rights by appealing the new assessment.

When you appeal your property tax assessment, you are challenging the value that is placed on your home by the State.

How does the government determine how much your home is worth? According to the Maryland Department of Assessments and Taxation (DAT) web site (www.dat.state.md.us), they oversee over two million property accounts. The state employs trained appraisers to evaluate and appraise every property. These appraisers use standard appraisal techniques to determine the value of your home.

Every property is re-evaluated every three years. If there is a change of value, there is three year phase in period for the value to be used as a tax base. To see how the assessor determined your home’s value, you can obtain a copy of the assessor’s worksheet at the local assessment office, which is located at 51 Monroe Street (4th Floor) Rockville, MD.

The appeal process begins by first receiving your new tax assessment. If you are satisfied with the value place on your home, there is nothing for you to do except pay the bill. However, if you are dissatisfied with the assessment, you have forty-five days to file an appeal.

The appeal is first heard at the Supervisor’s level, which allows you to discuss the assessment with an assessor. At this time, it is wise to obtain the assessment worksheet from the local assessment office (indicated above). You can obtain the worksheet for your home at no cost, and for a fee you can obtain the worksheets for the comparables used by the assessor. There will be an informal hearing to review all the information. After the hearing, a “final notice” is issued.

If you remained dissatisfied with the “final notice”, you have thirty days to appeal to the Property Tax Assessment Appeal Board (PTAAB). The board is not a part of the DAT; the board is comprised of local residents who have been appointed by the Governor. The PTAAB conducts an informal hearing to review all the relevant information. The board will issue a notice of decision to all parties involved.

If your dissatisfaction continues, you have thirty days to appeal to the Maryland Tax Court (MTC). In MTC, you are given the opportunity to present your case. The MTC will issue a decision based on the information presented.

Although MTC is the last administrative step in the appeal process, you can appeal the MTC decision to the Circuit Court. The Circuit Court reviews the case to determine if there were any legal errors in the process.

Hopefully, by following the process you will at least have the satisfaction of exercising your rights, and possibly being successful in appealing your property tax assessment. For more information about the appeal process, and to view the Property Owner’s Bill of Rights, visit the DAT website (www.dat.state.md.us/sdatweb/hog.html).