Coping with buyer’s remorse

by Dan Krell
DanKrell.com
© 2012

Coping with buyer’s remorse: regretting your home purchase

Did you ever have the nagging feeling, after buying something like an expensive piece of clothing, that maybe you should’ve saved your money or waited for the sale? If you’ve experienced buyer’s remorse, then you know that doubting feeling. Did you know that the likelihood of experiencing buyer’s remorse increases as the expense of the item purchased increases? Buyer’s remorse from buying a home can sometimes leave you feeling uncertain and hesitant.

Buyer’s remorse is sometimes referred to by consumer experts as post purchase dissonance, and is often caused by a discrepancy between a home buyer’s experiences and their beliefs. Simply stated, buyer’s remorse is when the home buyer feels regret about their home purchase. Although many home buyers may experience buyer’s remorse to varying degrees; not all home buyers experience buyer’s remorse.

Consumer behavior experts concur that the probability of experiencing buyer’s remorse is more likely to occur when the decision is binding and/or has a long term commitment, while there are other viable options available, along with a concerted effort in choosing the perfect home, placing a high level of emotional significance on the purchase, and the buyer’s propensity to experience anxiety.

As a home buyer, you might think that the home buying process is ripe for buyer’s remorse because: a real estate contract is not easy to back out of; you might feel that there is a considerable financial commitment; after making a thoughtful choice of home, you fantasize of the home with the features your home does not have, and with a lower price tag; you have placed an emotional investment on buying the home; and you’re feeling the pressure of the home buying process.

If you’re planning a home purchase, be aware that most people may feel some amount of buyer’s remorse sometime during the home buying process. However you can reduce the negative impact of the experience if you:

Respect the buying process: You should recognize that buying a home can be stressful, and can create feelings of anxiety when the unexpected occurs. Do what you can to minimize any additional stress and pressure created by the demands of buying a home.

Choose the right real estate agent for you: The interaction you have with your agent is subjective. The worst feeling you could have is when your agent is MIA when you need them. Working with a responsive agent, who makes themselves available when you need them, can reduce any additional anxiety that is created from ambiguous situations that can pop up during the process.

Don’t continue searching for homes: Once your offer is accepted, you should stop looking at available homes. You are more likely to increase doubts about your purchase if you compare how homes on the market differ from yours. However, consumer research indicates that your confidence about your purchase increases if you recognize how those homes are similar to yours.

Take what others say with a grain of salt: It’s difficult to be discreet about your home purchase, especially with your family and close friends; and, of course they won’t withhold their opinions about it either. Having the opportunity to listen to another’s view point about the home and the process could solidify your confidence about your home purchase- when you put their input in perspective and recognize that their advice may not apply to your situation.

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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 October 29, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.
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October 25, 2012September 9, 2018

MD home sellers and HOA docs

MD home sellers – be aware of your obligation to provide HOA or condo docs.

As time passes, real estate contracts become increasingly lengthy. Both home sellers and buyers are incredulous when they first encounter the many pages of a home sale contract. To put it in perspective for them, I often retell the stories that I have been told about how a time in the past real estate transactions were conducted with one or two page contracts, and sometimes even on just a handshake. To offer some solace to the seller/buyer, I assure them that there is importance to the seemingly endless number of notices and clauses; many notices are reminders to the seller and buyer about their obligations in the transaction.

A good example of the need for such notices is the seller’s obligation to provide the buyer with HOA/condo information and docs. In the past, this obligation was often taken lightly; sellers would often dig out the association rules which they were given when they purchased the home, dust them off and give them to the home buyer; with little expectation that the information would be reviewed.

Unfortunately, this practice is still occasionally being attempted by unknowing sellers and their agents. Several years ago, an agent asserted that an ancient looking manila envelope (that was stained because it was most likely used as a coaster and trivet) that the seller received when they purchased the home fulfilled their obligation to the buyer, even though the information was out of date and incomplete.

Providing up to date and complete documents to the home buyer allows the buyer not only to review the association rules, but also makes them aware of the financial and legal standing of the association.

As a home seller, it’s important for you to understand the need to fulfill your obligation with regard to providing HOA/condo association information, and to do it quickly. The buyer may “cancel” (void) the contract if they do not receive all the required information; and the buyer has a review period (five days to review HOA docs, and seven days to review condo docs), during which they may “cancel” (void) the contract.

Most resale packages that are obtained from HOA/condo associations contain all the documents required, however, it’s still up to you the seller to ensure all the required documents are enclosed in the package. To be more specific, local HOA/condo real estate disclosure forms were recently changed for clarity; including asking the seller to list fees, assessments, association contacts, and other information.

Home buyers are informed consumers; many are aware they are required to receive specific information about the HOA/condo from the home seller. And although the review period for the HOA/condo docs may have been abused by home buyers in the past, during the hectic sellers market when the review period was used as an “out” from making offers on multiple properties; today, home buyers take the review period seriously and many read the docs. You might even get a question or two about the bylaws/rules from an astute home buyer.

If you’re planning a sale of your home that is located within a homeowners association or a condo, you’re obligated to provide the home buyer specific information about your association. Besides your listing agent, who can guide you through the requirements and your obligations; your HOA/condo association and its management company are helpful sources to obtain the necessary information.

Original published at https://dankrell.com/blog/2012/10/25/md-home-sellers-and-hoa-docs/

by Dan Krell

October 18, 2012June 29, 2019

New laws affect homebuyers and homeowners

Two new laws that went into effect this month will have an effect on home buyers and home owners. One law affects home buyers purchasing foreclosed property, and the other is with regard to the Maryland homestead property tax credit.

First, H.B. 1373 Real Property – Foreclosed Property Registry, which went into effect October 1st, requires that Maryland homes purchased at a foreclosure sale be registered with the State of Maryland. According to the foreclosure registry website a “foreclosure purchaser” must initially register a home within 30 days of the foreclosure sale, and a final registration within 30 days of the recordation of the deed. A “foreclosure purchaser” is defined by H.B. 1373 as being “…the person identified as the purchaser on the report of sale required by Maryland rule 14–305 for a foreclosure sale of residential property.”

You might wonder why a registration is necessary once a foreclosed home is purchased. The registry was an outgrowth of purchased foreclosed homes that remained vacant. Vacant homes are at risk for a variety of problems; and if left vacant and untended for long periods of time can not only become an eyesore, but can risk the health and safety of the immediate neighborhood. Trespassing and infestation is a major concern; the longer a home sits vacant and untended, the probability increases for vandalism, vermin, squatters, and gang activity.

The law is most likely aimed at lenders that purchase back their own foreclosure or bulk purchasers, because at one time it was possible that some of these homes sat untended for long periods of time. In the past, such homes might have been cited for health and safety code violations with the intent to have someone tend to the home. However, since ownership may not have been clear due to the foreclosure process or absence of a point of contact, some of these attempts went unheeded.

For more information or questions about the registry, contact the Maryland Department of Labor, Licensing, and Regulation (www.dllr.state.md.us).

The other law that went into effect this month is H.B. 1081 The Homestead Property Tax Credit Reform Act of 2012. The purpose of the law is to stop the abuse of applying the credit when not applicable. Home owners who are “caught” claiming multiple properties and/or rented properties may have to pay uncollected tax and possibly a penalty.

But enforcement of this law has been questioned, as was reported by Steve Kilar for the Baltimore Sun in his October 1st article (Homestead Credit Penalty Goes Into Effect This Week). Some are concerned if and how the penalty would be applied to those who are “caught” wrongly receiving the homestead credit. Enforcement may, as was reported, rely on the requirement for the State to prove “willful misrepresentation.”

The effort to weed out those who are undeserving of receiving the homestead credit began several years ago, when in 2007 home owners were required to apply to receive the credit. This application process is culminating to a frenzy of home owners who have not yet reapplied. And according to the Maryland Department of Assessments and Taxation, home owners who have yet to apply/reapply for the homestead credit will have until December 31st to submit the application. If you are unsure if you have applied/reapplied, you can check your status by following the instructions on the SDAT website on the homestead credit).

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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 © 2012

October 10, 2012October 11, 2012

The Presidential housing debate

by Dan Krell © 2012
DanKrell.com

If you watched the presidential debates last week, you may or may not have noticed that neither Presidential candidate specifically spoke about the housing market. And since the debate, some have cried foul that one of the largest sectors in the U.S. economy was given short shrift in a debate about the economy. But then again, why should you be surprised – housing has basically taken a back seat to other issues throughout the primaries and now again in the heat of the presidential race.

The lack of discussion about the housing market is probably not because of disinterest, but rather both candidates are focused on making the fundamentals of the economy thrive. There is an economic truth that the housing market benefits from a thriving economy, as well as being impeded when there is economic malaise.

But if you paid attention, you may have picked up on issues that were touched upon that affect the housing market, such as employment and Dodd-Frank.

Obviously there is a relationship between employment and home ownership. A 2010 study by Neil & Neil indicated that loss of employment is one of the unexpected life events that caused foreclosure.

In response to the recent jobs report, Matthew O’Brien wrote in his October 5th The Atlantic article (“There Is No Jobs-Report Conspiracy: The Jobs Recovery Is Still Meh”): “If we take the same long view over the past few years, it’s clear that not much has changed. Growth is painfully slow, just like before. In 2011 we created 153,000 jobs per month, and so far in 2012 we have created … 146,000 jobs per month. It’s barely been enough to keep up with population growth.”

It should also be obvious that elevated unemployment and economic uncertainty has eroded consumer sentiment towards home ownership. This was suggested in Fed Chair Ben Bernanke’s February speech to the National Association of Homebuilders (federal reserve.gov), when he said: “High unemployment and uncertain job prospects may have reduced the willingness of some households to commit to homeownership.”

Additionally, many in the industry have complained that mortgage lending has been restricted due to increased regulation after the financial crisis. The Dodd-Frank Wall Street Reform and Consumer Protection Act (also known as “Dodd-Frank”) is one of the wide sweeping pieces of legislation that was enacted after the financial crisis to regulate and oversee the financial sector of the economy, as well as offer consumer protections.

As we have lived with Dodd-Frank for over two years, critics add to their critique about the Act’s limitations, over reaching, and failures. Some critics point out a failure of one of the main tenets, which is that no institution should be “too big to fail;” under Dodd-Frank critics claim that some of the country’s large financial institutions have become larger; while smaller regional and local financial institutions (which invest in local communities) are increasingly struggling.

Additionally, critics claim that mortgage lending has been stifled by rules devised to ensure those who securitize mortgages have skin in the game. Whether lenders comply with credit retention risk rules or they comply with Qualified Residential Mortgage rules (which requires strict credit underwriting and a 20% down payment), mortgage underwriting has become restrictive.

Make no mistake; the housing market is smack in the middle of the Presidential debate. The issues debated depict different visions for the economy, and of course, a housing recovery.

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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 October 8, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

October 4, 2012

Mold in your home

by Dan Krell © 2012

DanKrell.com

Environmental issues in the home are a concern. Although there are linked health concerns, mold is an environmental issue that is often misunderstood because it can be found almost everywhere and its indoor growth may be managed.

Mold is a fungus; and because there are thousands of types of molds (the exact number is unknown), it is often referred to in the plural. Molds are essentially found everywhere. Molds typically grow outdoors in moist areas and live in soil, on plants, wood, and decaying plant matter; however, mold can also grow indoors if the humidity is high enough, or if there is an unrepaired water leak. Molds are useful in digesting dead plant matter as well as for other purposes; however, exposure to molds can also be a health risk.

Molds reproduce via spores; mold spores are found outdoors and indoors surfaces, and can remain dormant for years before they grow. Mold spores enter the home through doorways, windows, and outdoor vents; as well as hitching a ride into the home by attaching themselves on clothing, pets, and other items that are carried into the home. If the spores land on a damp surface (such as where leaks or flooding may occur in the home) they begin to grow and digest the material. Wet building materials can offer a perfect meal for molds. Molds can thrive on materials made from paper products, cardboard, ceiling tiles, and wood products; however, molds can also grow on many other materials, such as dust, paint, insulation, drywall, carpet, and fabric.

The most common indoor molds are Cladosporium, Penicillium, Aspergillus, and Alternaria. Mold problems in the home can usually be seen and/or smelled. If unimpeded, molds can, over time, eventually destroy the materials where they grow. For this reason, prevention and/or elimination of mold growth in the home can prevent damage to your home and possessions, as well as save you money.

Limiting excess moisture is fundamental to controlling indoor mold growth. Common areas where mold may grow include bathrooms, basements, anywhere condensation and leaks may be found. A common cause for mold growth in the home is uncontrolled humidity. To limit mold in the home, experts recommend: indoor humidity levels should not exceed 50%; use air conditioning and dehumidifier to assist in humidity control; ensure exhaust fans are operational and the home is properly ventilated; carpets should not be used in areas that are susceptible to excess moisture (such as bathrooms); remove/replace previously water logged carpets; and repair any leaks.

Although controlling humidity levels and properly ventilating the home may inhibit mold growth in the home, a problem can still exist. To determine and/or repair a mold issue, a certified mold inspector and/or licensed mold remediation professional should be consulted.

Many people are sensitive to molds and sever reactions may occur; the Institute of Medicine linked indoor mold exposure to upper respiratory symptoms. However, according to the Centers for Disease Control (CDC.gov), the presence of mold isn’t always an indoor health issue. Obviously, a physician should be consulted immediately when symptoms from mold exposure are experienced.

Information for this article was obtained from the Centers for Disease Control (cdc.gov) and the Environmental Protection Agency (epa.gov). Additional information on mold in the home and health implications can be found on their corresponding websites (www.cdc.gov/mold/) and (www.epa.gov/mold/).

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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 October 1, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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