If you are renting a property or are considering renting a property,become familiar with the local rules and regulations on security deposit laws,which are also tide to how a landlord may deduct from the security deposit due to damages by the tenant. I focus on Metro DC
since that is where I practice real estate. Sometimes getting your security deposit back from a landlord can be a hastle, which is one reason to consider buying verses renting: no responsibility or ties to a landlord;only pay your mortgage and HOA if there is one (and of course follow by-laws).
If you are a landlord,this information is important. You don't just give back the security deposit,you have to give back security deposit with interest. If you are deciding to hold onto your home and rent it while buying another place in order not to "sell low/sell in a down market",keep in mind that you have to deal with (1)paying the mortgage while your home is on the market for rent--as you would do anyway while your home is on the market for sale if it isn't paid off;(2)it may cost you if the rental market value of your home is less mortgage rate---doesn't cover your monthly mortgage payment if you have one (and/or your HOA/Condo fee);
(3)you aren't just paying back the security deposit,but paying interest; (4)you are dealing with possible damage to your home which could cost more than the rental income you collect;(5)you also could deal with tenants being late on rent,not paying rent and having to deal with collecting,and evicting which can be difficult in a tenant friendly town;
(6)we don't know how long it will take for the sales prices to rise to where you want them to be and it could end being years which could cost you your capital gains benefits; (7)you may deal with days on the market and paying mortgage/hoa when you put the home back on the market for sale. There are many issues to consider.
Back to security deposit interest for landlord. You also need to keep a receipt that you gave the security deposit back for 2 years to protect yourself. If you deduct money from the security deposit due to tenant negligence,mess,damage,you must itemize what you are deducting a show receipts. The interest on security deposits,depending on where you live has been 3-4% and every 6 months you multiply the security deposit by the interest. This can add up. So you should read and consider the link below.
http://mlis.state.md.us/2009rs/billfile/HB0928.htm
Thursday, September 17, 2009
Wednesday, September 16, 2009
Before spending money,determine if it is a good business expense and think of the potential return.
I was talking with a colleague,who meets friends every so often. They recently ate in an area where you pay for parking. A friend suggested my colleague invite them his way to avoid paying for parking. Bless my colleague's heart, it was worth the $X he said and he was happy to go. He did exactly what I do.
I've invested about $100 in parking in the last year for networking events,lunch in the city with friends,meeting clients to work on sales listings and sales contracts,presenting and receiving offers,and for going to properties for inspections and appraisals. Sure, I would rather meet at a place closer to me,even perhaps in a less costly area,but I don't want clients and associates to perceive that I don't have the funding and/or don't think it is a good expense. At the same time, I will certainly not be shy to say it was great meeting you down here,why don't we meet next time,so you can see my neck of the woods.
B.T.W. my colleague got a referral from 1 of them ,which will pay the fee back 100 times.
I've invested about $100 in parking in the last year for networking events,lunch in the city with friends,meeting clients to work on sales listings and sales contracts,presenting and receiving offers,and for going to properties for inspections and appraisals. Sure, I would rather meet at a place closer to me,even perhaps in a less costly area,but I don't want clients and associates to perceive that I don't have the funding and/or don't think it is a good expense. At the same time, I will certainly not be shy to say it was great meeting you down here,why don't we meet next time,so you can see my neck of the woods.
B.T.W. my colleague got a referral from 1 of them ,which will pay the fee back 100 times.
Monday, September 14, 2009
Looking for a cost-effective,efficient way to market your neighborhood?
Whether you are selling real estate, computer services,cars or any product under the sun, the most important thing for you is to figure out how to get your message to your sphere or neighborhood in both a cost effective and efficient manner.
I was just given an opportunity,of course at a price,to buy an ad that will be:
(1)Name me as the sponsor of their post mailer;
(2)be exclusive as nobody else will be able to purchase an ad...whether they are also realtors or in another industry;
(3)Reach about 1600 people on the organization's mailing list,in a neighborhood where I am want more business.
(4)Where I won't have to "scrub" the list for do not mail as it is the organization's mailer
(5)Once I submitted my art,the organization coordinates the printing,addressing and mailing of the piece
The bottom line cost to me is going to probably be 10-12 cents a mailer, which may be half of the postage cost per piece, and if you do the math that way,then I am paying zero for the printing or addressing. This is my first month sponsoring the mailer and I have to decide how many to purchase in advance before other people seize the exclusive opportunity.
Sponsoring a mailer is a great way to get your name out there in a charitable manner,which will also promote your business and be very cost effective,I think. Look into local organizations and find out about being an "exclusive sponsor",even for a month if not every month. And, if other companies including competitors place ads in these mailers, it is even more important for you to participate to promote your business.
I was just given an opportunity,of course at a price,to buy an ad that will be:
(1)Name me as the sponsor of their post mailer;
(2)be exclusive as nobody else will be able to purchase an ad...whether they are also realtors or in another industry;
(3)Reach about 1600 people on the organization's mailing list,in a neighborhood where I am want more business.
(4)Where I won't have to "scrub" the list for do not mail as it is the organization's mailer
(5)Once I submitted my art,the organization coordinates the printing,addressing and mailing of the piece
The bottom line cost to me is going to probably be 10-12 cents a mailer, which may be half of the postage cost per piece, and if you do the math that way,then I am paying zero for the printing or addressing. This is my first month sponsoring the mailer and I have to decide how many to purchase in advance before other people seize the exclusive opportunity.
Sponsoring a mailer is a great way to get your name out there in a charitable manner,which will also promote your business and be very cost effective,I think. Look into local organizations and find out about being an "exclusive sponsor",even for a month if not every month. And, if other companies including competitors place ads in these mailers, it is even more important for you to participate to promote your business.
Sunday, September 13, 2009
How appraisers can help or hurt buyers
Part of the home buying process after your offer on a home is accepted by the seller is getting the home appraised. The purpose of an appraisal is to determine the homes worth and market value. If a home doesn't appraise for the price which a buyer and seller agreed upon, then the lender will only issue a loan for the amount which the home appraised for. At this point,a negotiating point,the buyer and seller can talk about making up the difference between the contract price and the figure which the home appraised at. The buyer may insist that the seller reduce the contract price to the price which the home appraised;the seller can stick to the contract price and tell the buyer to improve his offer;or the seller may agree to lower his/her offer if the buyer also agrees to increase his/her offer to make up the difference.
Over the last couple of years the appraisal industry has been heavily scrutinized,as some appraisers have been accused of "making sure their number matches the sales figure"---either due to pressure from the lender,listing agent and/or buyer agent to make sure a deal happens.
Some lenders and appraisors have faced pressure from clients and agents that they will not use their services or refer their services if the homes don't appraise. To be fair many agents want homes to appraise to keep the deals together. If a home appraises for higher than the contract price,which a buyer doesn't have to disclose to the seller,then the buyer is probably happy and should be very happy with how negotiations went on the sales price. Even If when a home doesn't appraise,in a "buyer's market" the buyer may have an upper hand and be happy with his/her agent, since there is so much housing inventory. The buyer may be just has happy if the home doesn't appraise,thinking the seller will agree to a lower price and just be happy to have a buy and not having to look for another buyer. Strictor rules have been enforced regarding appraisers to limit their communication with real estate agents--agents can't choose the appraisers to avoid the appearance of price fixing.
I am currently working with a buyer in Frederick, Maryland and we agreed to sales terms with the seller. One of the terms of the contract is that the home has to appraise at the agreed upon sales figure. I was told that the appraiser was going to complete his report last Friday, meaning to me that he did his diligence,evaluating the market trends for similar homes,actually going inside the homes which he is comparing to the home which my buyer is purchasing, and of course going inside the actual home which my buyer is purchasing. As reluctant as I am to tell other people how to do their jobs,appraisers should go inside of homes to see the homes features and faults. Driving buy a home to see just the outside and/or looking at recent sales history based on sales data on the internet and court records doesn't tell the entire story.
On Friday I touched base with the listing agent,who told me that neither she or the sellers had any contact with the appraiser,which is of particular concern to me because the home is owner occupied and at least one of the sellers is home almost all of the time. So,the owners would know if an appraiser or anybody else came inside of their house.
The listing agent expressed her concerned. If the home does not appraise that it is because the appraiser did nothing more than drive by the home or look at sales data on the internet and court records. She believes the home should appraise. Based on the sales data I have seen, I would be surprised if the home didn't appraise. But,I am not a professional appraisor and don't know everything they do to calculate values of homes.
The listing agent basically warned me that the appraisal will be challenged if it is below the sales figure because to her it appears that the appraisor didn't do his due diligence. Will the home appraise,I don't know. If it doesn't appraise I will 100% represent my buyer and talk about
the fact that the listing agent and buyer agent aren't appraisers.
At the same time,I did tell my buyers to be prepared that, if the home doesn't appraise, then the sellers will likely appeal the appraisal and could file a complaint about the appraisor for not performing his due diligence. Meanwhile,let's keep our heads' cool and wait for the report to come in.
Many homes do appraise and many homes don't appraise. The question is if the evaluation was done in a professional and ethical manner.
Over the last couple of years the appraisal industry has been heavily scrutinized,as some appraisers have been accused of "making sure their number matches the sales figure"---either due to pressure from the lender,listing agent and/or buyer agent to make sure a deal happens.
Some lenders and appraisors have faced pressure from clients and agents that they will not use their services or refer their services if the homes don't appraise. To be fair many agents want homes to appraise to keep the deals together. If a home appraises for higher than the contract price,which a buyer doesn't have to disclose to the seller,then the buyer is probably happy and should be very happy with how negotiations went on the sales price. Even If when a home doesn't appraise,in a "buyer's market" the buyer may have an upper hand and be happy with his/her agent, since there is so much housing inventory. The buyer may be just has happy if the home doesn't appraise,thinking the seller will agree to a lower price and just be happy to have a buy and not having to look for another buyer. Strictor rules have been enforced regarding appraisers to limit their communication with real estate agents--agents can't choose the appraisers to avoid the appearance of price fixing.
I am currently working with a buyer in Frederick, Maryland and we agreed to sales terms with the seller. One of the terms of the contract is that the home has to appraise at the agreed upon sales figure. I was told that the appraiser was going to complete his report last Friday, meaning to me that he did his diligence,evaluating the market trends for similar homes,actually going inside the homes which he is comparing to the home which my buyer is purchasing, and of course going inside the actual home which my buyer is purchasing. As reluctant as I am to tell other people how to do their jobs,appraisers should go inside of homes to see the homes features and faults. Driving buy a home to see just the outside and/or looking at recent sales history based on sales data on the internet and court records doesn't tell the entire story.
On Friday I touched base with the listing agent,who told me that neither she or the sellers had any contact with the appraiser,which is of particular concern to me because the home is owner occupied and at least one of the sellers is home almost all of the time. So,the owners would know if an appraiser or anybody else came inside of their house.
The listing agent expressed her concerned. If the home does not appraise that it is because the appraiser did nothing more than drive by the home or look at sales data on the internet and court records. She believes the home should appraise. Based on the sales data I have seen, I would be surprised if the home didn't appraise. But,I am not a professional appraisor and don't know everything they do to calculate values of homes.
The listing agent basically warned me that the appraisal will be challenged if it is below the sales figure because to her it appears that the appraisor didn't do his due diligence. Will the home appraise,I don't know. If it doesn't appraise I will 100% represent my buyer and talk about
the fact that the listing agent and buyer agent aren't appraisers.
At the same time,I did tell my buyers to be prepared that, if the home doesn't appraise, then the sellers will likely appeal the appraisal and could file a complaint about the appraisor for not performing his due diligence. Meanwhile,let's keep our heads' cool and wait for the report to come in.
Many homes do appraise and many homes don't appraise. The question is if the evaluation was done in a professional and ethical manner.
Tuesday, September 1, 2009
Getting somebody to call you,even months after you met
During the spring I held many open houses for a home on Briardale Drive in Derwood,Maryland trying to sell the listing,or if I didn't sell that house,at least connect with the people who came to my open houses.
After open houses I call,send notes,and type emails to the open house guests asking for feedback,if they have any questions on the home,any questions in general about real estate and how I can help them out. I continue to follow up with the open house guests,inviting them to future open houses I am holding at that home,in that neighborhood,price reductions on the home,other homes on the market and sales activity in the neighborhood.
So,at about 3:30 p.m. today I received an email from open of these open house guests who I hadn't heard from since March. They are preparing to put their home on the market,want to meet so I can see their home,talk about the market and see if we are a good match. Making positive impressions on prospects and following up does pay off...sometimes the next day,sometimes the next month,sometimes the next season and sometimes next year.
I am humbled that they have such a positive impression of me to invite me into their home.
What a great way to start September
After open houses I call,send notes,and type emails to the open house guests asking for feedback,if they have any questions on the home,any questions in general about real estate and how I can help them out. I continue to follow up with the open house guests,inviting them to future open houses I am holding at that home,in that neighborhood,price reductions on the home,other homes on the market and sales activity in the neighborhood.
So,at about 3:30 p.m. today I received an email from open of these open house guests who I hadn't heard from since March. They are preparing to put their home on the market,want to meet so I can see their home,talk about the market and see if we are a good match. Making positive impressions on prospects and following up does pay off...sometimes the next day,sometimes the next month,sometimes the next season and sometimes next year.
I am humbled that they have such a positive impression of me to invite me into their home.
What a great way to start September
Using my own home in selling another home
Sunday was a busy day for me. I had an open house in the afternoon in Washington, DC and in the morning took buyers back for a second look at homes that we had already previewed in Kemp Mill,a subdivision in Silver Spring, Maryland.
My buyers and probably other buyers as well would have made offers right away on one of the homes,a 4 level split-level with a basement and sub-basement. The first time we looked at the home the floor in the kitchen was in dire need of repair,carpeting in the home needed cleaning or replacing. The home was big and bland. Kitchen cabinets and counters are probably original,baths should be updated.
I went back to see the home again on my own and noticed that the floor in the kitchen was repaired and that the carpeting was cleaned. Although the home still looked "original" these repairs make the home show much better. So I showed again to one of my buyers.
On Sunday I went back again with the buyers and a friend/mentor they asked to come along and to give his opinion on the condition of this home and a second home...a rambler on Kenbrook Drive.
The friend/mentor said that while the home needs some work,it is a good home and for the buyers to consider it. As we were going through the home,I thought to myself,I live in a 4 level-split 5 minutes from this house from Stonington and have done a lot of work on the house. Maybe if the buyers see my home,they will see the potential in the home on Stonington,which will either clinch their decision that they want to move forward on Stonington or remove it from consideration.
I always talk with buyers and sellers about sales comparables...other similar homes on the market and/or other similar homes that have sold. If the other comparable homes aren't on the market or unavailable to be seen,then buyers and sellers can go by the next best thing...a print out of the properties with pictures which the listing agent posted on the internet for the home. Fortunately,I realized that my home was a great comparable home for the buyers to actually see the inside of for what it is...even though my home isn't for sale. Don't let the rumors get started.
I will say that it was easier to act on the idea of showing the buyers my own home because we have established a rapport and are friends. I would probably be reluctant to bring somebody into my house who I don't know very well. But the point is that when you are selling,part of customer service that seperates some sales people from other sales people is to take advantage of all of their resources and to come up with out of the box ideas to help their clients.
My buyers and probably other buyers as well would have made offers right away on one of the homes,a 4 level split-level with a basement and sub-basement. The first time we looked at the home the floor in the kitchen was in dire need of repair,carpeting in the home needed cleaning or replacing. The home was big and bland. Kitchen cabinets and counters are probably original,baths should be updated.
I went back to see the home again on my own and noticed that the floor in the kitchen was repaired and that the carpeting was cleaned. Although the home still looked "original" these repairs make the home show much better. So I showed again to one of my buyers.
On Sunday I went back again with the buyers and a friend/mentor they asked to come along and to give his opinion on the condition of this home and a second home...a rambler on Kenbrook Drive.
The friend/mentor said that while the home needs some work,it is a good home and for the buyers to consider it. As we were going through the home,I thought to myself,I live in a 4 level-split 5 minutes from this house from Stonington and have done a lot of work on the house. Maybe if the buyers see my home,they will see the potential in the home on Stonington,which will either clinch their decision that they want to move forward on Stonington or remove it from consideration.
I always talk with buyers and sellers about sales comparables...other similar homes on the market and/or other similar homes that have sold. If the other comparable homes aren't on the market or unavailable to be seen,then buyers and sellers can go by the next best thing...a print out of the properties with pictures which the listing agent posted on the internet for the home. Fortunately,I realized that my home was a great comparable home for the buyers to actually see the inside of for what it is...even though my home isn't for sale. Don't let the rumors get started.
I will say that it was easier to act on the idea of showing the buyers my own home because we have established a rapport and are friends. I would probably be reluctant to bring somebody into my house who I don't know very well. But the point is that when you are selling,part of customer service that seperates some sales people from other sales people is to take advantage of all of their resources and to come up with out of the box ideas to help their clients.
Wednesday, August 26, 2009
Is it worth rolling the dice when you flew into town to find a home?
Whether working with sellers or buyers,I often get the comment,why don't we "try this list price and see what happens" or "let's try this offer and see what happens".
I will listen to the home seller's/home buyer's logic and reasoning for any price they want to offer. I will gather as much information about the home,the community and any "inside information" that may impact the price point....such as if another like home is coming on the market/I was told that another buyer looked at that home and also registered an offer. Whatever my client wants me to list their home for sale (or rent for) or purchase (or rent for)I will do and at the same time will tell them to temper expectations if the number is not consistent with the market/the inside information I have.
I took a client in town from Florida,relocating to the area for a job. I contacted a listing agent to register my client's offer on a home in Silver Spring just off of University Blvd. that we were going to write and that the offer was about $10,000 less than the asking price. When I talked with the listing agent, he told me that 2 other offers were coming in.
I conveyed this to my buyer to show that there was obviously other people interested in this beautiful home,with the home being on the market only a few weeks and receiving multiple offers,there was a chance that one offer would be full price. There is also a chance that the other people will make lower offers and/or not look as strong financially in which case the offer could be accepted. So,did my client want to re-think his offer or was he happy with his offer?
My client told me to roll the dice and stick with his offer,which was a pretty good offer, and if they come back with a counter offer we'll go from there. He flew back to Florida to resume packing with his wife and family for the big move. I got a call last night from the listing agent that one of the offers was full price and that the person was strongly qualified,so the owners will work with that offer and thanks for my efforts.
My client was let down,but ready to move on to the next home. So he is going to fly back into town next week. Will his next offer be full price? I don't know. It depends if the place is priced well. I'll show him the comparables,talk about what happened last time and see how he wants to play it.
I will listen to the home seller's/home buyer's logic and reasoning for any price they want to offer. I will gather as much information about the home,the community and any "inside information" that may impact the price point....such as if another like home is coming on the market/I was told that another buyer looked at that home and also registered an offer. Whatever my client wants me to list their home for sale (or rent for) or purchase (or rent for)I will do and at the same time will tell them to temper expectations if the number is not consistent with the market/the inside information I have.
I took a client in town from Florida,relocating to the area for a job. I contacted a listing agent to register my client's offer on a home in Silver Spring just off of University Blvd. that we were going to write and that the offer was about $10,000 less than the asking price. When I talked with the listing agent, he told me that 2 other offers were coming in.
I conveyed this to my buyer to show that there was obviously other people interested in this beautiful home,with the home being on the market only a few weeks and receiving multiple offers,there was a chance that one offer would be full price. There is also a chance that the other people will make lower offers and/or not look as strong financially in which case the offer could be accepted. So,did my client want to re-think his offer or was he happy with his offer?
My client told me to roll the dice and stick with his offer,which was a pretty good offer, and if they come back with a counter offer we'll go from there. He flew back to Florida to resume packing with his wife and family for the big move. I got a call last night from the listing agent that one of the offers was full price and that the person was strongly qualified,so the owners will work with that offer and thanks for my efforts.
My client was let down,but ready to move on to the next home. So he is going to fly back into town next week. Will his next offer be full price? I don't know. It depends if the place is priced well. I'll show him the comparables,talk about what happened last time and see how he wants to play it.
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