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What Do You Need to Know About Short Sales?

There are a significant number of short sales still happening in our market, so here’s a brief overview of how short sales work.

With the recent change we’ve seen in our market, homes values have increased, and as a result, we’ve also seen fewer short sales happening. There are still a significant number of people who are underwater at this time, though, so I want to answer a few questions you may have about short sales.

First, what does the bank do with all of the seller’s information? They gather that information to make sure that when they’re combing through your bank statements, income, and financials, everything is accurate.

For the private investors that put up the money for these short sales—say they put up $500,000, the home sells for $400,000, and they net $360,000 or $365,000 to satisfy that mortgage—where are they going to get back that $140,000 or $135,000 difference?

Many times, they get these funds back through mortgage insurance, but they have to see how those clauses were written originally. That’s why there is a lot of behind-the-scenes investigation during a short sale. Usually there are several investors, so it could be somebody that’s servicing the loan for—say—a Wells Fargo. There might also be several different companies that are serviced for them. They’re gathering that information and taking it back to the investors and combing through what insurance premiums they have to offset those losses.

"There is a lot of behind-the-scenes investigation during a short sale."

After that, it’s a question of what those investors are willing to take. Sometimes they ask the seller to pay a portion of that loss. One of the other major factors to consider is tax deficiencies—maybe you lost $50,000 and now you have to claim that as income.

Sometimes it’s not just agents giving you that information, which is why it might be helpful to talk to a real estate attorney or an accountant who’s familiar with short sales. There are several people involved in the process who can help you.

If you have any more questions about short sales or need a referral for a good accountant or real estate attorney, don’t hesitate to give us a call. We’d be glad to help you.

How Can Renovations Affect Your Home Value?

It may seem like a good idea to renovate certain aspects of your home before you sell, but there’s no guarantee that you’ll get a full return.

Today I want to talk to you about which improvements you can make that will maximize your home’s value.

A lot of people think that if they put in a new kitchen for $25,000, they’ll get a full $25,000 in return. That’s not always the case.

I spoke with an appraiser at a meet-and-greet this morning about whether or not a good guideline existed to gauge home value. He said that when they looked at comparable sales, he looked at other homes in the area both with and without recent renovations (like new kitchens), and compare the prices.

So in a lot of cases, you shouldn’t expect to see a dollar-for-dollar return on something like a new $25,000 kitchen, especially if it’s a custom kitchen in a higher-end home—you may only see a 50% to 60% return on that.

Be careful when you’re doing these upgrades to sell your home. Contact a professional to come out, look at your home, and do a comparable sale analysis. Have homes in the area had similar updates? If so, were they full remodels or just partial ones, where you only replaced certain features like vanities or light fixtures?

When we meet with our stager to come through the property, they’ll make recommendations such as changing the marble countertops to quartz, switching your faucets or light fixtures. Don’t be a Harry Homeowner and try to make these changes yourself without professional help unless you’re experienced—lousy renovations can seriously damage the value of your home.

"Lousy renovations can seriously damage the value of your home."

Make sure you know what you’re spending, and whether or not that will help you sell the home, and get a return on your investment. For example, some people want to get a new roof installed when the roof is 15 years old, and there are still five years of life left in it—here, you shouldn’t expect to get the $8,000 to $10,000 that you spent on it as a return. It’s not worth investing the money in. If there was water damage or missing shingles, that would be a different story.

Spend your money in the right places; that’s where contacting a professional will come in handy. Making improvements on a home that you’re going to live in for awhile is fine, and you can spend a little more on those changes, but it’s a good idea to stay away from trendy renovations. Trends come and go, and there’s no guarantee you will be doing your home a favor.

There will be a different analysis for some who bought their home 10 years ago versus someone who bought 20 years ago, just based on what they may have to do to get the home ready to sell as far as upgrades go. So just know where you’re at, and again, contact a professional to help.

If you want an accurate assessment of your house, give us a call. We’d be glad to walk through the home, give you suggestions, show how you compare to other homes, and give you a good value.

How to Hire a True Professional Real Estate Agent

How can you make sure that you hire the right real estate agent to guide you through our changing market? I’ll give you a few tips today.

How can you make sure you hire the right real estate agent? 

82% of homebuyers hire the first agent they talk to. Whether an agent was recommended or referred to you, you need to look at their online reviews to get a real idea of what it would be like to work with them. 

We have just over 200 reviews online. Just like when you buy merchandise, you need to check the reviews. We are selling a service, so you need to look at reviews and ask yourself, “What am I getting for my money?” 

Now, on the buyer side, you’re not paying the commission straight out; that’s usually paid by the seller. Still, it’s important that you hire a knowledgeable agent who will help you navigate the process. 

"82% of buyers hire the first agent they talk to, but are they getting the best value?"

We have a team of real estate professionals so when you work with us, you will always have support. If you call the office and you can’t get in touch with your real estate agent, one of our licensed real estate assistants or other agents will help you with whatever you need. 

It’s also important that you work with an agent who will get you good comps before you make an offer. We are seeing a lot more “For Sale By Owner” properties as the market changes. You need to know about comparable properties in the neighborhood so that you don’t pay more than you should for the home. 

When that happens, the home usually fails to appraise. If the seller doesn’t agree to change the purchase price, it could cost you a lot of time and money. From the home inspection to giving notice on a rental to setting up moving companies, there are a lot of costs that come with moving. 

Since there is so much that happens during a real estate transaction, it’s very important that you have professional assistance from a great real estate agent. If you have any questions or are interested in buying or selling a home, just give us a call or send us an email. My team and I would be happy to help you!

June Market Update for Baltimore

Now that we’re halfway through the year, it’s as important as ever to stay up-to-date with what is going on in our Baltimore market. Here are a few of the things you need to know.

Today I’d like to talk about what’s really happening in our Baltimore real estate market. 

With about 80 homes under contract at any given time, we’re now seeing pockets of both buyer’s markets and seller’s markets.

While it’s true that our local market is getting better, other states such as California, Arizona, and Florida have only about one and a half months of inventory compared to our five, almost six, months.

So, really, when you look at the market there are a number of factors to consider in terms of the big picture such as area and price point. 

In Hartford County and Baltimore County, for example, homes priced $500,000 and above are moving more slowly.

"The key thing really is to know what is going on in your market including the negatives."

The key thing really is to know what is going on in your market including the negatives, whether there are a lot of multiple offer situations, and so on. 

Oftentimes in this competitive market, issues occur when a seller is confronted with the prospect of needing to make repairs but is hesitant because they feel they are safe as a result of having multiple offers.

Unfortunately, this can result in the home going back up on the market, causing it to take longer to sell.

There are some issues going on in today’s market. But ultimately, these can be worked with as long as you are aware and your agent is proactive.

If you want more information or have any questions, we welcome you to call or email us. We look forward to hearing from you.

Be Careful of Zillow's Zestimates

Whether you're buying or selling a home, you've probably come across Zillow and their Zestimate tool. Allow me to explain why you should tread lightly with the Zestimate and your home's value.

We have a lot of clients who get worked up over Zillow and their Zestimates. However, these Zestimates—Zillow's home value estimation tool—are wildly inaccurate sometimes. In fact, the Zillow CEO actually sold his house in 2016 for 40% less than what his site's Zestimate said it was worth. 

Zillow hasn't walked through your property and they don't know about any upgrades you've done, and they can't factor in location. Your home's upgrades compared to features of other homes that have recently sold are crucial in determining its value. Zillow aggregates and average of area home values rather than doing a fine-tuned valuation of your property.

"Many sellers price their home inaccurately because of a Zestimate."

This is especially true with the market moving at as fast of a pace as it is right now. Many sellers think they can do it all on their own, but we see them end up pricing their home inaccurately thanks to a Zestimate. 

Similarly, when buying a home, you want a real estate agent to help you compare properties to determine values of the homes you're looking at since Zestimates can be so far off. Zillow is the top website for real estate searches right now, but you need to work with an agent to see how homes you're interested in compare.

If you have any questions about Zillow when buying or selling a home or you'd like to know what your home is really worth, give us a call or send us an email. We'd be glad to help.