New Home Fever

As spring approaches, so does the annual rush to new home communities with their professionally-decorated model homes that impress, attractive landscaping that gives new meaning to the term “curb appeal”, and deals that seem too good to overlook. It is so easy to buy a new home, that you will wonder why you ever considered resale.

Before you go down this path, let me share my seven rules for buying a new home:

1. Never step foot into a new home model without your own licensed buyer’s agent.

Reputable builders who offer to co-op with brokers, and most of them do, have already included this expense in their pricing. In other words, you’re paying for a buyer’s agent in the price of the home whether you have the benefit of an agent’s representation or not. You will not get a “break” in your home price when you buy new construction without an agent.

2. Never step foot into a new home with a lender’s pre-approval in hand.

Builders do tend to have their own in-house lenders whose job it is to enable you to buy the new home. And you may decide to work with this lender, rather than the one who pre-approves you. But the pre-approval assures you an independent assessment of your home-buying qualifications from a mortgage professional with no affiliation to the builder.

3. Don’t agree to use the builder’s lender without comparison-shopping.

Some lenders recommended by builders provide a kickback or finder’s fee to the builder and they pass on that cost to borrowers in the form of a higher interest rate or closing costs. When a builder offers you incentives (free finished basement, closing cost help, upgrades) for using their recommended lender, realize that you probably are paying for those items in the higher costs of your loan. Otherwise, why would the builder care where you borrow your money?

4. Before you sign a contract, research the builder.

The best way to do this is to knock on the door of homeowners that previously purchased from this builder in the same or other nearby communities. Don’t stop with one or two if you run into unhappy homeowners, because any community will have a certain number of people who are impossible to please. Walk away from the builder and new home if a substantial number of current homeowners report bad experiences with the purchase or after-closing service.

5. Before you sign a contract, research the area.

This is particularly important if there is vacant land nearby, because you want to know what the zoning is currently as well as any proposed changes. But don’t stop there – be sure to check with the Department of Transportation to identify any possible road construction that could interfere with your property or the traffic patterns you expect to encounter.

6. Include a home inspection contingency in your sales contract.

A new home is not automatically “okay”. Most people do this for re-sale homes today, but few make the small investment to do so for new construction. The local building inspector only looks for compliance with building code, not for best practices. Even if a home inspector finds no major issues, that peace of mind is worth every penny spent on the home inspection.

7. Get everything in writing.

Buying a home is always an emotional experience, especially if it is a brand new home with other prospective buyers walking through the model as you’re sitting in the sales office contemplating a decision. Most reputable builders will accept a deposit on the home and lot you’re considering for at least a few days so you have time to preview their standard sales contract and do a little planning without the house selling out from under you. Be sure to ask for this.

During that time, sit down and make a list of every detail including your choice of lender, payment by the builder to your buyer’s agent, options, guarantees, the home inspection contingency, timing for completion and anything else you have discussed with the sales person, your agent, and your spouse. Make sure that everything YOU want is included in the sales contract, not just the builder’s standard wording. In fact, challenge any of the contract provisions if you do not fully understand and agree to without hesitation.

Buying a new home can be a wonderful experience, and living there can be even better. If you have new home fever, contact me for some additional hints to assure a smooth and pleasant experience.

Related links:

• Willow Woods - Severn, MD
• The Estates at Aisquith Farm - Davidsonville, MD
• The Oaks at Waters Edge - Elkridge, MD
• The Groves at Piney Orchard - Odenton, MD
• Kinsport of Annapolis - Annapolis, MD
• Gatherings at Cedar Ridge - Odenton, MD

Feedback or more information:

Email: mwoda@remax.net
Website: www.MargaretWoda.com

Crofton Real Estate

New Home Fever

Copyright 2007. All Rights Reserved. Margaret Woda

Military Transfer to Maryland?

This dreaded word has haunted military families since the frontier days: “Orders.” (Army Wives on the American Frontier by Anne Bruner Eales)

That little bitty paper called “orders” can have a big impact on many lives (that’s a polite way of saying your life and that of your family is about to turn upside down). Goodbye, friends. Goodbye, familiar schools. Goodbye, familiar doctors. Goodbye, scout troop. Goodbye, favorite restaurant with the world’s best Rueben sandwich. Goodbye, soccer team. Goodbye, routine. Daddy or Mommy is going to ______ and you’ll be “fine” in the new location. It will be an adventure. You’ll make new friends.

Ahhhhhh… I remember those days. I’ll always remember the year that my husband drove to Maryland from Rhode Island to pick me up on Thursday night (about 8 hours), and we drove to Charleston, South Carolina to look for a home (about 10 hours). Our two children stayed behind with grandparents – thank goodness! We arrived on Good Friday afternoon, when many of the real estate offices were closed for the Easter weekend, and we had to look at houses and neighborhoods, select a place to buy, write an offer, and get a loan by dinner time on Saturday so we could drive back to Maryland on Sunday in time for my husband to continue back to Rhode Island and try to get a little rest before the next morning. I wouldn’t wish that experience on anyone, yet I know it is not unusual for military families, even today.

If you’re expecting orders to any of the many military facilities in the D.C. – Baltimore area, you will face enough upheaval that you cannot control – so take charge of at least one factor that is within your control: work with a real estate agent and lender who “get” what you’re facing… who understand the whole military pay thing, and the fact that some portion of it will be different in this area than it is in your current duty station and some of your income is not taxable.

Yes, the Internet is great, and you can sit at a computer in Germany and look for homes in Maryland. The truth is that your relocation will be much easier if you put this job in the hands of an experienced real estate agent who is familiar with the area AND has specific experience in working with the military. Even with all those fancy websites you can visit to learn about an area, there’s still nothing like a relocation package prepared especially for you that is filled with home listings and brochures about area sites and businesses. There is something about holding this information in your hand that makes you feel more in control.

And wouldn't it be nice to have someone waiting and ready to show you homes when you arrive - someone with whom you've been communicating for several weeks or months, so they know your expectations and concerns?

If you have orders, contact me today for a FREE Maryland Relocation Package or for help in finding a military-friendly real estate agent in one of the 63 countries around the world that is served by RE/MAX offices and agents.

Related links:

• Military Assistance Program
• GSA Lodging
• 10 Core Relocation Programs
• Housing at Ft. Meade
• BRAC
• Mortgage Lender
• Military Avenue

Feedback or questions:

• www.MargaretWoda.com
• mwoda@remax.net
• Crofton Real Estate

Military Transfer to Maryland?

Copyright 2007. All rights reserved. Margaret Woda

CHANGING MARKET - It's not as bad as you imagine!

One of my website visitors recently commented that “homes just aren’t selling now”, and I assured him that they are selling in his zipcode – at a slightly lower sale price and longer timeframe than a year ago, but they definitely ARE selling.

It occurs to me that the pace of home sales could be a concern for many of you, so let me share with you the statistics for December (the most recent month for which they are available):

December 2006 vs. December 2005 in Crofton, MD (21114)

Contact me for statistics in any other zipcode served by the Metropolitan Regional Information Systems, Inc., the regional multiple listing service for parts of Maryland, Virginia, Delaware, Pennsylvania and Washington , D.C.

• The average “sold” price is UP 1.32% – $363,155
• The median “sold” price is DOWN 4.32% – $330,000
• Total units sold is up 18.38 % – 38
• Average days on market more than doubled – 86
• Total new listings – 27
• Total new sales – 38

I think it’s a very good thing to see that there were more sales than new listings in December. “Days on market” is still less than the 4-6 months that has often been the norm in Crofton over the years. And prices in Crofton are not nearly as low as the media would have you believe. So take heart!

And make your plans accordingly, if you're thinking of selling. First, sell your home BEFORE you contract to buy a new one in order to decrease your stress and increase your negotiating power for the next home. Second, start trying to sell about four-six months BEFORE you want to move. By the time your home is on the market for about 90 days and it gets to settlement, you could be looking at that much lead-time. Be prepared, however, to make a two-step move because you will want to accept any strong offer you receive – even if it comes in the first week. A quick sale like that may not fit your schedule if you list six months before you plan to move, and you may have to make temporary arrangements for a few weeks or months.

In a buyer’s market, it is critical that you find an experienced real estate professional who has worked in a buyer’s market before and knows how to handle it. Don’t underestimate the importance of this advice. This choice will impact whether your home sells, for how much, and how long it takes.

Again, if you would like to see similar statistics for any other zip code served by the MRIS, please contact me directly for the information.

Feedback or more information:

• Email: mwoda@remax.net
• Website: www.MargaretWoda.com
• Crofton Real Estate

CHANGING MARKET – It’s not as bad as you imagine!
Source: Margaret Woda and MRIS

New real estate investors, this is for you.

Is “Invest in Real Estate” one of your New Years Resolutions?

I’m not referring to experienced investors who already have several transactions under their belts, who recognize that they are still learning, and who soak up all the information they can from experienced real estate agents and other experts. These real estate investors are probably already on the right track, although it never hurts to go back to the basics.

I am addressing this to folks who have decided to purchase a property for investment yet never done so, who do not comprehend the difficulties they face, and who consider themselves expert because they attended a seminar or read an article or two. If this describes you, be sure to continue reading...

1. Walk before you run.

You probably wouldn’t run a marathon without training because you want to minimize the risk of injury and you don’t want to collapse before the finish line. Well, you shouldn’t start investing in real estate without training either.

Start by talking to the real estate pros and considering every word of advice from experienced investors and real estate professionals alike. Keep notes, and keep track of who suggested what so you can follow up with these advisors later if you run into a situation they’ve faced in their own situation. Then, start small. You can minimize your risk with that first investment property – and there are many risks – by controlling your variable costs.

If you’re buying an income property, for example, choose one that’s already rented, preferably to long-term tenants. This will enable you to realistically anticipate the cash flow for your new investment without likelihood of immediate vacancy factor or rental costs. If you’re buying a property to "flip” – i.e. rehab and sell for profit – remember that it comes with carrying costs as well as hidden construction costs that are difficult to anticipate. “Flip This House” is fun to watch on TV but, as Eric Bramlett says, that’s about as realistic for the average investor as “Sponge Bob Square Pants.” (Bramlett is the broker and owner of One Source Realty in Austin, Texas.)

2. Remember that real estate investing is a marathon, not a sprint.

Quick profit in real estate is more of a myth than a reality. Buying houses to rehab and flip may seem like the best and fastest route to profit, but it is hard work and requires skill, foresight, market knowledge and financial resources. It’s hardly a good first step into real estate investing. Again, the best advice is to start small.
Choose a property that you can purchase at a price significantly below market; one that is structurally sound and needs only cosmetic touches or clean-up to sell at top dollar.

And don’t forget to use a 1031 Starker Exchange, or you will have a hefty tax bill eating into your profits. Income-producing property will appreciate and add to your wealth with minimal risk and without significant effort on your part. With the help of an experienced real estate agent, purchase a property that is structurally sound and likely to appreciate, hire a property management company to deal with the day-to-day hassles, and go about your life – with the bonus of a small rental income check in your mailbox every month. A few years later you can re-finance the property to pull out cash for other investments or sell it for a profit. Again, don’t forget your friend, the 1031 Starker Exchange.

3. Make and follow a business plan.

After you learn everything you can and build a team of real estate professionals – an accountant or tax advisor, experienced real estate agent, property management company, and home-improvement contractor – it’s time for you to sit down and develop your short-term and long-term business plan.

You want to know how much money you have to spend up-front, how much reserve you can set aside for unexpected expenses, how much monthly expense you can handle, how much time you can devote to this. You want to know how much income you hope to generate and whether you want to focus on rehabbing and flipping or income-producing properties. Be sure to include the cost of real estate professionals in your budget, and remember that you get what you pay for. It is likely that experienced and knowledgeable professionals may charge you more – but your end profits, with the benefit of good professional advice, are likely to be optimized. Decide upon an area, a type of property, and an approach to purchasing… Ask yourself if you plan to “rent with an option” or use some other deferred settlement strategy, buy foreclosure properties, or search for hidden gems in the marketplace. Do you plan to use the equity in your home to pay cash for the purchase or do you have a pre-approved loan in place for investing?

Make a plan, execute it – and stick to it! ‘Chances are that other investors are looking for similar properties, and the best ones get snapped up quickly. For example, I recently listed a property for a distressed seller, and the price was very, very low for a quick sale. Numerous agents and investors contacted me within hours of the property going on the market, but one investor wrote a full-price non-contingent cash contract within an hour of its going into the computer – sight unseen! He had a plan, kept his eye on the multiple listing service, and knew this property met his guidelines; he didn’t have to give a second thought to purchasing the property before anyone could even look at the property.

A word of caution: Like any investment, whether it is the stock market or real estate, income potential is real but not guaranteed. You should never invest money that is not discretionary, i.e. money that you can’t afford to lose. Minimize your risk of loss by working with experienced real estate professionals.

Feedback or more information:

• mwoda@remax.net
• www.MargaretWoda.com

New real estate investors, this is for you
Copyright 2007. All rights reserved. Margaret Woda