LuxManor Real Estate

Short Sales

Short Sales

Q: What is a short sale?

A: A Short sale occurs when a seller needs to sell his property  but owes more to pay off his loan than he will net when he sells the home.

Q: How is the lender involved?
A: The owner needs the lender to forgive the difference between the cost to sell the home (including the outstanding mortgage) and the sales price. There are some penalties to the seller in exchange for this “forgiveness”, particularly with the seller’s credit but it is less harmful to the seller’s credit than a foreclosure.

Q: How is this different from a foreclosure?
A: With a foreclosure, when the seller fails to make the mortgage payments, the bank will take ownership of the home through a legal process that may or may not include an eviction. With a short sale, the borrower still owns the property and gets permission to sell the home without having to pay the deficit.

Q: Does it harm the seller to sell a home through the short sale process? I don’t want to take advantage of someone like that.

A: A few years ago, I had a buyer client who did not want to even look at short sales due to a (misplaced) conviction that he did not want to take advantage of some poor seller in financial trouble. I unsuccessfully attempted to explain that the seller needs to short sale to go through to protect his credit from even more serious harm and to avoid a deficiency judgement and the taxes that come with a foreclosure. It is the seller’s choice to go through this process (in the hopes that the bank will agree to it) and buyers are actually helping in this case.

Q: Do short sales sell at a discount?
A: Generally, yes. In some cases these homes have been neglected for financial or other reasons. Many times you’ll see agents put very little into marketing because there is no guarantee the property will receive short sale approval and close. Because of these concerns, many buyers avoid these listings, which in turn decreases the value of the property and list price. Even many banks considering approving a short sale do not want short sales included in the comparables.

Q: Why would a buyer avoid such listings if they sell at a discount?
A: Some buyers do not have the time to wait for a bank’s response. An abnormally quick turn-around could take roughly 30 days to obtain an answer from the bank, but I’ve also seen cases where it took over two years to receive an answer, and even still the answer in that case was “No, we do not approve the deal.” Motivated buyers who need to move will pay more for the ability to move and make plans on their own schedules. Plus, interest rate locks are generally good for no more than 60 days which can be important to some buyers who fear a rise in rates and want to lock into today’s rate.

Q: What happens when there are two loans? 
A: Both lenders must approve the deal. Should the home go into foreclosure, the first trust will be paid all money due on that loan before the second trust lender receives any money. This is why a second trust comes with a higher rate: the second trust lender takes on more risk. This complicates things to a much higher level. Sometimes one lender will agree to the deal and give 30 days to close, but by the time the second lender gives a response, the initial time period has expired and the process gets derailed. It’s not exactly “back to square one,” but getting both lenders to agree, at the same time, can be frustrating and sometimes impossible.

LuxManor Real Estate

The Value of the Open House

Now that we’re in the Spring Market and with the plethora of articles against Open Houses, I wanted to share my thoughts and findings regarding the relevance of the Open House.

Q: What is an Open House?
An Open House is when a property is available to be viewed by the public regardless of their interest in buying (neighbors are welcome), qualifications to buy (no approval letter is needed) or any other prior screening.

Q: How often do homes sell because of the Open House that would not have otherwise sold?

Based on having closed over 700 transactions, many of which had Open Houses, and other research I’ve done, it is clear that it is very, very rare for a home to sell solely due to the Open House. Estimates showing 2% of homes selling due to the Open House seem high.

Q: So what are the benefits of holding the home open?

Benefits to the Seller: The seller can obtain feedback through the listing agent who interacts directly with visitors to the Open House. As a LuxManor Realtor, I ask all Open House visitors what they liked and disliked about a home. Every so often there is something useful to be incorporated into our overall marketing efforts.

Benefits to the Realtor: the agent has a small possibility of selling the home himself to a potential buyer without having to come back to the property several times to service every person who calls (and qualifies) who wants to see the home. Buyers now learn about listings via the internet and their Realtor well before most other sources. A serious buyer without a Realtor can gain access and buy the property through a private appointment with the listing agent.

An Open House may also present an opportunity for the Realtor to meet neighbors who may have their own real estate interests as well as buyers who will eventually buy a different listing.

Q: Why would a seller not want his/her home held open?

Some sellers are private and would prefer not to have neighbors come inside. Others might prefer that all visitors have an appointment with either their own agent or with the listing agent. It is rare that items are stolen from an open house, but the risk level increases when allowing anyone into your home.

Q: What should I do to prepare for an Open House?

The same preparations for putting the home on the market should be done for the Open House. Cleaning, decluttering, depersonalizing, etc should be done before the home is available for any showings. Since the odds are higher that the home will be sold outside of the Open House, there is no reason to make a special effort for an Open House. As with such preparations, I always advise my clients to hide any small items of value. Before an Open House, LuxManor Realtors walk through the property and secure anything the seller may have overlooked.

Q: How do I know that the buyers with an agent are more qualified than buyers coming to the Open House?

You don’t. Many Realtors will rush out to show a property without even screening the potential buyer but at least the agent usually has a way to contact the buyer if need be (phone number, email address, etc). With an Open House, someone could walk in off the street, give a fake name and be out the door again. With an agent showing, the agent’s access is recorded in the lockbox and if there is an issue, there is a trail.

Q: When is it in the seller’s best interest to hold a property Open?

While the home may not sell because of the open house, there are certain markets (like 2003-2005) where the final sales price will be higher because of the Open House. In those years (hot seller’s market), many Realtors were literally too busy to show every client the listing before the listing went under contract. The more offers, the higher the sales price was likely to be. This does not work in a buyer’s market when the buyer sees the home and comes back Saturday or Sunday to a slow open house and then wants to haggle.

Q: Which is better, a Saturday or a Sunday Open House?

Before doing research, I would have bet it was Sunday. Surprisingly, the empirical evidence has shown that Saturday Open Houses can get just as much traffic as Sunday Open Houses.

Q: So what is the bottom line?

There is nothing wrong with holding a home open every so often (especially soon after the home comes on the market) and is common practice for many listings at LuxManor Real Estate. However, it is not likely to result in a sale. Hide your valuables and understand that this is far from the most important part of the marketing.

Adding an Open House to the marketing falls well below the following: quality and quantity of photos, complete and accurate listing in the MLS, beautiful fact sheets, information about the neighborhood, a proactive/responsive Realtor, feedback from actual buyers through their agents, staging/repairs and, of course, proper pricing of the home.

LuxManor Real Estate

New Maryland Lead Paint Law

If you are the landlord for a home located in Maryland, or may eventually rent out such a home, new regulations that go into effect 1/1/15 may affect you.

Here is where the rules will change: For homes built between 1/1/50 and 1/1/79, landlords will now need to have a professional test the property for lead paint (using dust wipes) every single time a tenant moves out and report those results to MD (paying the $30 filing fee to Maryland Department of the Environment).

Federal regulations (Yes, DC, MD and VA) require landlords and sellers of all homes built before 1979 to disclose if they have any knowledge or reports of lead paint for their properties. This is required disclosure to any tenant or purchaser.

Does this mean we should avoid homes built before 1979? Not at all (especially given the quantity of them in the DC metro area), we just need to make sure testing is done, rules are followed and disclosures are given.

Note: manufacturers had to stop lead based paint production on 12/31/78. They knew this and were making as much as possible until that date. They were allowed to sell whatever inventory they had beyond that date. It was more expensive but considered better quality.

If your home has been certified lead free and/or was built after January 1st 1979, you are not affected by current lead paint rules and this does not apply to you. If your Maryland rental property was built before January 1st, 1950, there is no change the existing rules and you still need to have your home inspected and tested for lead paint hazards every time a tenant moves out.

How can your home be certified lead free? You’ll need an certain test done (XRF) and if any lead paint is found, you’ll need to properly remove it inside and/or outside the home. The process may not be cheap in the short run but once you’re determined to be lead free, you no longer need to file appropriate paperwork. When you’re ready to rent or sell, this will be a big advantage that you’ll be happy to use to market your home.

When you’re ready to sell your home (regardless of year built or jurisdiction) make sure to contact LuxManor Real Estate to ensure all aspects of your sale are handled correctly especially when it comes to lead paint.

All information was verified through Pete Hanson, owner of Whitehall Associates. Whitehall has handled Jim Roy’s lead testing (as well as other Environmental Testing) needs for years and done a great job for him and his clients. petehanson@comcast.net is his email. 301-908-0325 is his mobile number and 301-879-1421 is his office number.

LuxManor Real Estate

Real Estate Market Report

Performance Report: How the has the real estate market evolved over the past year?

Compared to one year ago (largely due to the last few months), the market has slowed down to a very noticeable degree.

Relative to August 2013, the number of listings one year later that sold is down about 7%. Days on market have increased substantially (up 16%) but the average sales price is about the same as July 2013. Values were up slightly in June 2014 from the previous month but down in both July and August. Many buyers are not motivated to give up the very low rates they locked in over the last few years and most lenders are still quite strict with their lending guidelines.

It has been reported that applications for new home purchases have decreased 9% while the average loan size increased about 1% for August 2014.

What does this mean for sellers? Proper pricing, effective marketing and the condition of your home are crucial in getting the most money and a quick sale but patience may also be needed.

What does this mean for buyers? If you can qualify for a loan and find a home that meets your needs, you will be in a better negotiating position. You can also enjoy a mortgage at historically low interest rates.

Low-E and Argon Gas Windows Explained

Most heat is lost (or comes into the property) near windows and doors. This is why most homes have their vents or radiators near an exterior wall and specifically near a window. High performance Low-E and Argon gas windows do a great job of saving you money in your heating/cooling bills by keeping heat where you want it.

Low-E, meaning low emissivity, is a very thin layer (or several layers) of metal that block longer wave lengths (heat) visible light passes through. When Argon gas is sealed between the panes of glass, it acts as an additional insulator (heat and sound) and is non-toxic should a pane break and you inhale it into your system.

Single pane windows offer very little efficiency. You can feel the cold by touching the glass inside a home on a cold day. Single pane windows can be helped if storm windows are used but the air in between is no different from the air we breathe. High performance windows are designed to cut down on heat transfer, and subsequently, your heating and cooling bills.

Bonus tip: Ensure your weather stripping is in place around exterior doors. If you can see light between the door and the frame, air is getting through, too and costing you money.

The Top 3 Equity Building Improvements Before You Sell

By investing some time and a minimal amount of money in your property, you can increase your equity by much more than you put in. If you have further questions, LuxManor Real Estate can help you decide where your money is best spent and recommend contractors who can make it easy and affordable.

Where should you spend money on your home to maximize your bottom line? Here are the top recommendations to increase your equity well above the costs:

  1. Increase your curb appeal

Curb appeal is what beckons potential buyers into your home. Simple, yet dramatic improvements can be made to a house exterior including: cleaning the yard of any debris, trimming trees and shrubs, spreading fresh mulch in the planting beds, mowing the lawn and reseeding any bare spots, putting a fresh coat of paint on the front door, installing a more aesthetically pleasing placard with your house number, and a new welcome mat outside the front door. These improvements can be made for less than $1,000 and will go a long way to setting the stage for the impression the buyers will get once in your home.

  1. Go clean and neutral with walls and flooring

Present your home as an open canvas, where buyers can envision their own furnishings and personal touches. Busy wallpaper can be a distraction and hindrance to selling a home. A fresh coat of paint in a neutral color, such as an off-white or beige, will brighten your rooms and will appeal to the widest range of buyers. Painting each room in the same color will also be more cost effective. The same philosophy goes with flooring. If your carpet has heavy wear or deep stains, you should consider replacing it with new, neutral colored carpet. If there are hardwood floors underneath carpet, you may want to expose and refinish the floors instead.

  1. Give your kitchen and bathroom a face lift

Kitchens tend to be the heart of a family home, so anything you do to improve the kitchen will add value. You don’t necessarily need to invest in an expensive renovation to freshen up your kitchen’s appearance. You can spruce up a kitchen by installing new knobs or pulls for cabinet doors, painting or staining cabinetry, regrouting kitchen counter tiles, and replacing vinyl flooring with laminate or tile.

For bathrooms, you may want to replace the toilet and vanity if they are stained or outdated. A new toilet and vanity can cost less than $500 and will make a big difference in the room’s appeal. You may also want to refinish a stained tub, caulk or re-grout around the tub/shower, buy a new shower curtain, or replace the light fixture over the sink.

Note: for some homes, a complete kitchen and/or bathroom renovation may be the best choice. Jim Roy can assist you with such decisions.

Simple Steps to Shrink Your Heating Bill

During the winter, the heating bill can account for more than half of a homeowner’s utility costs. Read on to learn a few easy tips on how to lower your bill and still stay warm during the frigid months of winter.

Insulate your House
Take into account the little gaps around doors, windows, and other exposed areas. Plug any leaks or holes that allow warm air to escape from your home. Caulk around doors and windows and use weather-stripping as necessary.

Keep your Heat Pump Clutter Free
If you have electric heat, make sure to keep your outside heat pump free of leaves, grass, dirt, drifting snow or anything that could restrict the air flow. Pour hot water over any coils that are frozen to remove the ice. Make sure the insulation on the refrigerant line is in good condition.

Inspect and Clean Ductwork and Vents
Check heating system filters at least monthly and clean or change them as needed. Dirty filters can increase operating costs significantly, damage equipment and reduce efficiency. Be sure that heating registers and vents are not blocked by draperies or furniture. Vents should also be cleaned regularly.

Keep Fireplace Dampers Closed
Make sure fireplace dampers fit tightly and keep them closed when you’re not using the fireplace to prevent warm air from escaping through the chimney.

Let the Sun in
On sunny days, open drapes or blinds to allow nature solar heat to warm the house. Keep drapes and blinds closed on cloudy days and at nights.

For any questions on this or other real estate matters, please contact Jim Roy, your housing expert at LuxManor Real Estate.

Jim Roy, Principal Broker
Tel: 301-254-7253
jim@luxmanor.com
www.luxmanor.com

Winterize Your Home

Why Winterize?   Preparing your home for winter now will prevent minor issues from snowballing into major issues in the coming months.

Performing a few simple maintenance checks will help ensure:

  • Your home is running efficiently
  • Energy costs are reduced
  • Your property is protected, and
  • You and your family stay safe & warm throughout winter

If you have any questions about winterizing your home or are thinking of selling your property, contact Jim Roy at 301-986-9401.

Click on the link or image below to print our Winterization Checklist!

Checklist to Winterize Your Home

Checklist to Winterize your Home

New Smoke Detector Law in MD effective July 1st, 2013

Effective today, any seller of a property in Maryland must disclose the age of the home’s smoke alarms and whether the smoke alarms include sealed, long-life batteries. Sellers may, however, choose to use the disclaimer form and say nothing about the property’s condition.

All battery operated alarms must be sealed, long-life batteries by the year 2018.

If the alarms in any rental properties (in Maryland) are: older than 10 years, not working properly, and/or a change in tenancy occurs, battery operated smoke detectors must be upgraded to sealed, long-life batteries. Such detectors currently cost between $6 and $20. The price can go higher if the detector covers carbon monoxide as well.

Finally, the new legislation requires that at least one smoke detector be located on every floor of a residence by 2018.

4806 Briggs Chaney

Our new listing at 4806 Briggs Chaney Rd!

Welcome to this beautiful 5 bedroom, 4.5 bathroom colonial in the prestigious golf course community of Cross Creek. This home is one of the largest models with over 5,500 square feet. The bright main level features a spacious table space kitchen with island and double wall ovens; adjoining family room with vaulted ceiling, skylights and gas fireplace; elegant dining room with custom molding; formal living room and den/library with built-ins. The upper level offers four bedrooms including a spacious master suite and luxury master bathroom with dual vanity, jetted tub and separate shower. The fully finished lower level has an additional bedroom and full bathroom, perfect for an in-law suite. Complementing the home is an expansive deck overlooking a lush green backyard and a 2 car garage with an extra large driveway and parking pad. A true gem indeed!

About this home:

  • Subdivision: Cross Creek Club
  • Year built: 2000
  • 5 bedroom, 4.5 bath
  • Lot size: .38 acre
  • Parking: 2 car garage, extra large driveway and parking pad 
  • Fully finished basement
  • Heat fuel: Gas
  • Hot water: Gas
  • Cool fuel: Electric
  • HOA fee: $176/quarterly
  • Taxable living area: 3,952 square feet (top 2 levels)

[sr-listings type=”Homes” mls_id=”PG8118602″]

Market Update

We have had a very interesting Spring. Nationwide, home values have generally appreciated nicely over the last year. Interest rates have increased a bit but are still near historic lows. Are we heading towards a housing bubble? Experts (including Jim Roy, Owner of Luxmanor Real Estate) think not. Why? Lenders are still not willing to lend to those most likely to default. This is very different from the lending market of 2000-2005. We saw so much demand and risky speculation that, few could argue, resulted in anything less than a (temporary) collapse in home values for most of America. Ideally politicians and lenders have learned their lessons and we’ll avoid the mistakes of a decade ago.

In many areas that have seen double digit home value increases in the last year, those homes are still below their highs. The DC Metro area is up 10% for the median price and days on market have dropped 41.51% to just 31 days. The number of transactions are up as well (12.26%). These stats are for June 2013 compared to June 2012.

While many people have made some quick money buying/flipping homes, the safest way to think about Real Estate is that it’s a marathon. Anyone buying should be ready to be in it for the long run. Historically, it’s a very safe investment over long periods of time. For most of us real estate is something even more important: our home.