Bold predictions for real estate and housing

by Dan Krell
DanKrell.com
© 2012

We survived the “Mayan Apocalypse” of 2012, so what’s in store for the housing market and the real estate industry in 2013?

The “Long Slog:” Although analysts disagree about the date of the housing market bottom, most agree that the national housing market bottomed out sometime time in 2009-2010. Many looked forward toward 2012 to be a phenomenal year for housing and a return to normalcy. Certainly 2012 housing figures were better than those of 2011, but in many areas of the country (including locally), the market fell short of outperforming 2010.

Unlike the occasional Pollyanna story about the local housing market, analysts expect “the long slog” or “the long grind” that will take years (emphasis on the plural) to get back to normalcy. No matter how you articulate it, and barring future economic setbacks, experts describe the climb out from the bottom as a long, slow trudge that will have high and low points along the journey.

Home sale prices: When real estate fell into a seemingly endless downward spiral in 2008, some sectors continued to do well. Homes priced at and above one million dollars continued to outperform other sectors of the housing market through 2011. The “upper bracket” sector began to show weaknesses in the early part of 2012; as luxury home sales slowed, mid-range home sales picked up momentum. However, activity flipped toward the end of 2012; as upper bracket activity increased significantly, while activity in other price sectors decreased. Until fiscal cliff, debt ceiling, and other government budget debates are resolved; local upper bracket home sales will be inconsistent during 2013. This market bifurcation can skew local monthly average home sales figures, as well as possibly distorting monthly marketplace snapshots.

Hyper-local real estate: Regional and local variances in home sale prices will require home buyers and sellers to continue to focus on hyper-local data to determine selling prices. One of the best ways for you to clarify neighborhood sales trends is to consult a local real estate agent for recent neighborhood comparables.

Mortgages & Appraisals: Getting a mortgage may become be increasing difficult in 2013. Recent reports of FHA losses and a possible bailout could force new guideline changes to help the venerable mortgage program. Because of increased foreclosures and delinquencies, there is talk about FHA becoming increasingly credit score reliant, and increasing mortgage insurance premiums for riskier borrowers.

Appraisals will continue to be a lightening rod of criticism and a source frustration. Since its inception, the Home Valuation Code of Conduct was confusing to everyone, and eventually became a scapegoat for many seemingly inconsistent valuations. However, a low sales volume due to lack of resale inventory will also create issues with appraisals.

Pent-up demand: No need to worry about interest rates – yet. Keeping mortgage interest rates low, the Federal Reserve has commented on continued purchases of mortgage backed securities as part of a larger stimulus program. However, continued low mortgage interest rates may not be the reason for home buyer activity as much as pent up demand. However, home buyers waiting on the sidelines to purchase a home have been met with low resale inventories during 2012. For many home owners, the general lack of home equity remains the major reason to not sell a home; and it’s also a reason for low resale inventories to continue through 2013. Continued low inventory environment will create a competitive environment for home buyers.

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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. Copyright © 2013 Dan Krell.

November 28, 2012November 23, 2021

What’s your relationship with your home; how homes impact our lives

by Dan Krell
DanKrell.com
© 2012
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Have you considered your relationship with your home? Just like the relationships we have with our family, friends, and acquaintances, we also have relationships with inanimate objects such as our cars, computers, and our homes. Granted, the relationships we have with our cars and homes are not the same as our human relationships, and it may sound farfetched; but if you think about it for moment, these relationships can affect our moods and lifestyles just the same.

Your relationship with your home can sometimes make you feel satisfied or frustrated, and maybe both. But chances are that you were not always ambivalent about your home. At one time you might have thought your home was perfect. Or you may have decided that you were ok with the quirks in the home because you once planned to fix them.

But the reality is that over time you change: your lifestyle changes; your use of space changes. Likewise, your home changes too: the systems become less efficient; the rooms may feel too small/large; the kitchen becomes dated, etc.

Just like your human relationships, your home requires maintenance. Regular maintenance of your home’s systems can help assure that you will be comfortable day to day. Ignored systems can fail when you rely on them the most, leaving you miserable and wondering about your home. Commonly ignored systems include (but certainly not limited to) HVAC and the roof. Having a licensed HVAC professional check the home’s furnace and air conditioning as recommended may not only ensure the system works when you need it the most, but may also help lower energy bills. Regular inspection of the home’s roof gutters and downspouts could prevent future water penetration issues.

Of course, as we continually change and develop, we want our relationships to grow as well. So, it is possible that one day you might look around your home and feel that it’s time to spice up the relationship a little – You might be thinking of some renovations, updates, and possibly expanding the home.

Unless you plan to make renovations regularly, don’t make a mistake and focus solely on making your home “trendy.” Before you decide on a major project, experts recommend you consult with a professional interior designer and/or architect to assist in making choices that can prolong the “freshness” of the renovation.

Kitchens and bathrooms are usually where the most money is spent, and that’s because those rooms tend to get the most traffic and use. When designing a kitchen or bathroom, it is easy to go overboard on the renovation, but even a modest refurbishment can increase your enjoyment of the home.

As you renovate the interior, don’t give the exterior the short shrift. Upgrading the home’s windows and siding not only increases the home’s efficiency, but may also increase the home’s curb appeal when it’s time to sell.

Relationships change and sometimes end; even the most meaningful ones. This is no different with your home. One day you may find that although your home may have sheltered you and your family without fail for many years, you may find that your needs may have changed; you may need more or less space, or may need to live in a different city. And just like old friends, you may one day find yourself fondly thinking about your “old” home where you once lived.

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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 November 26, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

November 8, 2012November 23, 2021

Consider rescheduling closing instead of a post-settlement occupancy

Home sellers and buyers look forward to closing day, when the deed to the home transfers; and in a perfect world, everyone moves on with their life. However, there are times when the seller asks to stay in the home after settlement. Ideally, a post-settlement occupancy can be avoided by adjusting the settlement date to accommodate the extra days needed to stay in the home. But alas, the world is not perfect and sometimes a post-settlement occupancy is quickly arranged. Whether you’re the home seller or the buyer, make certain you understand the post-settlement occupancy agreement: what you’re getting into, as well as your risk and liability.

Typically, when someone “rents” a home, a standard lease is used; but since the post-settlement duration is usually very short, the post-settlement occupancy agreement is mistakenly an afterthought to the home sales contract. Here in Maryland, there may be various forms that are specifically used in a particular region for this purpose; such as the one that is used here locally. Just like the sales contract, the post-settlement occupancy agreement contains terms and conditions, including duration and fee collected.

Additionally, a deposit is collected in case there are damages to the home during the post-settlement occupancy. The buyer usually has a walkthrough prior to the settlement, as well as at the end of the post-settlement occupancy to ensure that there is no damage and the home is conveyed in the condition that is expected.

Unfortunately, the risk of loss and liability to the home during a post-settlement occupancy can be vague. Even if the post-settlement occupancy agreement specifies who is responsible for such loss, there may be additional considerations.

It is usually expected that the seller repair any damage they caused during their post-settlement occupancy. But what about damage or loss caused by a fire or an extreme weather event (such as a tornado or a hurricane)?

Even if the post-settlement occupancy agreement is specific about risk of loss and liability, your insurance company might have a different view of risk of loss and liability in a post-settlement occupancy arrangement. Any insurance carried by the home seller may limit or exclude coverage from such damage/loss that occurs during the post-settlement occupancy. Furthermore, the buyer’s home owner’s policy may have exclusions and/or limitations for coverage if the home is vacant or occupied by anyone other than the policy holder. Consult with your insurance company.

Another consideration is that the buyer’s mortgage company may have restrictions about a post-settlement occupancy. The mortgage note may specify that the home be “owner occupied;” which means that the home is not to be rented. A post-settlement occupancy by the seller may infringe on the terms and conditions of the mortgage note. Consult with your mortgage company.

Even if your real estate agent is able to explain the post-settlement occupancy agreement to you, there are considerations other than what is written on the form – you should consult with your attorney before entering into such an agreement.

Due diligence is required before entering into a post-settlement occupancy agreement. Consult with your agent about rescheduling settlement, if possible. Additionally, consult your attorney, insurance agent, as well as your mortgage company to make certain you understand the terms and conditions of the agreement, as well as your liability and risk of loss.

Original published at https://dankrell.com/blog/2012/11/08/consider-rescheduling-closing-instead-of-a-post-settlement-occupancy/

By Dan Krell

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. 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 DanKrell.com © 2012