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

September 20, 2012

Need to know when buying a new home that is built in Maryland

by Dan Krell © 2012
DanKrell.com

In today’s housing market, chances are that you may looking to buy a new home rather than a resale;

be prepared and know what you can reasonably expect from the home builder, as well as understanding how to resolve problems with the builder. Whether or not you have a licensed real estate agent representing you in the transaction; the Maryland Office of the Attorney General Consumer Protection Division provides consumers guidance, pertinent information and other resources to dealing with a home builder and buying a new home built in Maryland.

Unfortunately, many home buyers believe they do not need representation when buying a new home. Because the new home builder reps are often friendly, helpful and may appear to be on your side in the transaction; it is understandable how a home buyer may misconstrue the home builder’s sales persons’ loyalties. However, home buyers must recognize that the builder’s sales people represent the home builder.

Before engaging a home builder and their sales people, you should check out whether or not the home builder is registered with the Home Builder Registration Unit. Additionally, unless the home builder hires a licensed real estate agent to represent them, the home builder’s sales reps must also be registered with the Home Builder Registration Unit.

Before entering into a contract with a home builder,

you might consider reading the consumer information booklet that home builders are required to provide consumers before entering into a new home sales contract. The booklet is provided by the Home Builder Registration Unit of the Maryland OAG Consumer Protection Division and discusses: choosing a builder, the contract, how your deposit is protected, custom home contracts, construction of your home, and resolving problems.

The Maryland OAG Consumer Protection Division oversees a Home Builder Guaranty Fund “that allows consumers to seek compensation for losses resulting from an act or omission by a registered builder who constructs a new home for a consumer.” You may seek compensation from the guaranty fund if your home builder is registered with the Home Builder Registration Unit and you entered into a contract for a new home built in Maryland after January 1, 2009.

Payments from the Home Builder Guaranty Fund are to cover actual loss that result from “an act or omission by a registered builder as determined by the Consumer Protection Division or a court of competent jurisdiction…” The Guaranty Fund is not meant to cover such items as: attorney fees, punitive damages, interest, court costs, personal injury, or subsequent damages. The “actual loss” that is covered refers to “the costs of restoration, repair, replacement or completion that results from the incomplete construction of a new home, a breach of an express or implied warranty, or a failure of the builder to meet certain construction standards or guidelines.”

Guaranty Fund claims must be made “within 2 years after the consumer discovered or should have discovered the loss or damage or within 2 years after the new home warranty expires, whichever comes first. If the consumer files a claim against the home warranty plan, he or she must file the claim against the Guaranty Fund within 4 months after that claims process is exhausted.”

For further information on the Home Builder Registration Unit, consumer information booklet, and the Home Builder Guaranty Fund – visit the Maryland OAG Consumer Protection Division website on home builders (www.oag.state.md.us/Homebuilder/index.htm).

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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 September 17, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

June 20, 2012

Perceptions of U.S. housing boosted by international investors

by Dan Krell ©2012
DanKrell.com

A June 11th report by the National Association of Realtors® discussed how international home buyers are an increasingly important segment of the U.S. housing market (realtor.org). The NAR release, “International Sales Continue to Climb in U.S. Market, Realtors® Report,” indicated that the dollar volume of U.S. homes bought by foreign home buyers increased about $16.1 billion over the last year. As encouraging as this may sound, there’s more to the story than you might imagine.

Interestingly, the report stated that average price paid for a U.S. home by an international home buyer is $400,000; and 30% of the homes purchased were priced between $250,000 and $500,000. Because foreign home buyers typically find it difficult to obtain a mortgage, it was reported that 62% of the purchases were cash deals. The NAR report stated that although many of these home purchases were for primary residences, a majority of international home buyer purchases were for vacation and investment uses.

Would you believe that 55% of international home buyers originated from Canada, China, United Kingdom, Mexico, and India? Canada accounted for the largest number of foreign home buyers (24%), followed by China (11%), the U.K. and Mexico (6% each).

But before you decide to learn a new language, you should note that four states have received the most attention from these home buyers; Florida, Arizona, California, and Texas “accounted for 51% of the purchases.” Of these sales, Florida accounted for 26% of all foreign home purchases, and California coming in second with 11% of foreign purchaser sales.

This market segment is not a new phenomenon; international home buyers have participated in the U.S. housing market for a long time. It just seems as if this segment of home buyers has been stronger during economic turmoil (Are you old enough to remember the influx of Middle East investors during the 1970’s and Japanese investors during the 1980’s?). The increasing number of international home buyers investing in the housing market is a tribute to the perceived value of U.S. real estate.

By the way, the influence of international sales has not gone unnoticed by Congress either. In an effort to help stimulate this sector of the housing market, S. 1746: Visa Improvements to Stimulate International Tourism to the United States of America Act was introduced in October 2011, by Senators Charles Schumer [D., N.Y.] and Mike Lee [R., Utah], and H.R. 3341: Visa Improvements to Stimulate International Tourism to the United States of America Act, was introduced in November 2011 by Rep. Mazie Hirono [D-HI2] and Rep. David Dreier [R-CA26]). These bills offered resident visas to foreign investors who invested at least $500,000 in U.S. real estate. However, some have criticized such stimulus as an empty gesture because international home buyers may not need additional incentive to purchase homes in the U.S.

Will foreign home buyers save the housing market, as a U.S. News and Report piece suggested (October 28, 2011)? Unlike the clichéd climax of a dramatic film noire, when the foreign investor saves the day, the answer may be “yes” and “no”. Although housing is receiving an increased amount of attention from foreign investors, it is unlikely that the increased activity itself would save the U.S. housing market. However, the increased foreign investment in U.S. housing may boost the perceived value of housing and the perception of home ownership.

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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 June 18, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

by Dan Krell DanKrell.com © 2012