Real Estate News and Commentary

August 11, 2010October 5, 2019

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!)

August 4, 2010June 28, 2019

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.

July 30, 2010October 5, 2019

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.

July 22, 2010October 5, 2019

Hiring family to sell your home: A relative experience

by Dan Krell © 2010

The thought of hiring a real estate agent can be unnerving, let alone the fact that you might have to consider hiring a family member to act as your listing agent. For some, familial pressure to hire a relative could be intense and may be a potential source of conflict; while for others, no one but “Cousin Jerry” would be considered to list their home.

Some people are ambivalent about hiring relatives for any service, let alone for a real estate transaction; they believe that mixing business with family matters is not a good idea. Besides asserting discretion over their business and financial dealings, these folks know that family ties and relationships could be at stake if the sale doesn’t go as expected. They do not want family matters or guilt to interfere with business decisions, especially if they feel a need to fire their real estate agent or even seek recourse.

Still many people do not have a second thought about hiring their “Cousin Jerry” as their listing agent. Besides feeling an expectation to do so, some people cite a comfort level and trust that exists from their long time relationship (which can be hard to come by when working with a stranger).

Many experts agree that it is not a good idea to hire a relative who is inexperienced and/or has a record of poor performance. So if you plan to hire a relative to list your home, consider that practicing real estate can sometimes be difficult even for a seasoned professional, let alone someone who is new to the field and/or is a part-time practitioner.

Believe it or not, the issue of commission is typically secondary when it comes to hiring a relative to list a home. Don’t expect to pay the least amount of commission if you plan to hire “Cousin Jerry” to list your home; he may be directed by his broker on commission negotiation. The fact is that most real estate agents are negotiable when it comes to commissions and you might find a better deal from someone else.

If you’re intent on “keeping it in the family” consider interviewing “Cousin Jerry” as you would any other real estate agent; become familiar with “Cousin Jerry’s” license and experience. Although “Cousin Jerry” may have a real estate license, it may not be in the jurisdiction where your home is located. However, if his license is within the proper jurisdiction- he may not be experienced in the local market.

“Cousin Jerry’s” lack of local market experience could jeopardize your sale by not providing the proper disclosures and understanding the various contracts of sale. Seller disclosures requirements may vary depending which county/city your home is located; even full time agents have a difficult time staying on top of county differences in seller disclosures. Additionally, “Cousin Jerry” should be careful to pay attention local agent etiquette, as potential buyers could be turned away.

If you want to work with “Cousin Jerry” but want to mitigate family interference, a couple of alternatives you might consider include: having “Cousin Jerry” refer you to an experienced local agent for a referral fee (so he is indirectly involved); or, have “Cousin Jerry” work in tandem with an experienced local agent so a professional can act as a buffer from family matters.

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 19, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

July 15, 2010November 28, 2020

Mortgage oversight agency (FHFA) could stall county greening efforts

Last week, a federal oversight agency raised concerns about a green retrofitting loan program in an effort to protect consumers and the integrity of lending practices. Normally, this would not seem unusual; however on June 6th the Federal Housing Finance Agency (FHFA) issued a statement that affects many Property Assessed Clean Energy (PACE) programs across the country, and may affect Montgomery County’s Home Energy Loan Program (HELP) even before it officially kicks off later this year.

As part of a national initiative to reduce energy consumptions and curb greenhouse gases, PACE (pacenow.org) programs are intended to make green retrofitting affordable for home owners. The program generates funds for the retrofitting through “tax lien oriented financing” by selling “PACE bonds,” and is repaid by the home owner through annual tax assessments.

Enacted through Council Bill 6-09 (April 2009), HELP is Montgomery County’s local green retrofitting loan program, which is part of a first wave of PACE programs implemented throughout the country. Although HELP is awaiting a green light from the County Council to get underway, the county’s Department of Environmental Protection is preparing to manage the program. HELP’s financing arrangement is anticipated to allow a home owner to repay the “loan” over fifteen years through their property tax bill.

As the oversight agency for Fannie Mae, Freddie Mac and the Federal Home Loan Banks, FHFA’s (fhfa.gov) statement cited concerns about “certain energy retrofit lending programs,” specifically referring to local tax assessment loan programs by PACE. “Safety and soundness” concerns were cited because the PACE tax liens could interfere and disrupt a “fragile housing finance market” due to the “absence of robust underwriting standards to protect homeowners and the lack of energy retrofit standards to assist homeowners, appraisers, inspectors and lenders [to] determine the value of retrofit products…”

Although FHFA has collaborated with government agencies, state and local officials to work through their concerns, the issue appears to be unresolved. FHFA’s statement asserts that the tax assessment created through a PACE loan is unlike the typical tax assessment; such that the term and amount of a PACE related tax assessment exceeds a typical local assessment and do not have the usual community benefit that is associated with local tax initiatives. Additionally, the concern over such modifications would “present significant risk to lenders and secondary market entities, may alter valuations for mortgage-backed securities and are not essential for successful programs to spur energy conservation.”

Notwithstanding some critics concerns over the obsolescence of a green retrofit before such a loan is repaid, additional concerns raised by FHFA include: the shift of traditional lending priorities (PACE investors have minimal risk due to the first lien position); PACE program’s collateral based underwriting does not take into account the home owner’s ability to pay; the lack of lending disclosures (such as required by the Truth-in-Lending Act and other consumer protections); “and uncertainty as to whether the home improvements actually produce meaningful reductions in energy consumption.”

It remains to be seen whether HELP will be affected by FHFA’s new guidelines to Fannie Mae and Freddie Mac to deal with PACE loans. However, FHFA stated that the concerns were not raised to undermine programs meant to reduce consumer energy consumption, but rather to encourage the implementation of retrofitting loan programs with “appropriate underwriting guidelines and consumer protection standards.”