Don't cross the street without looking both ways first: how you should approach buying or selling a home.

The title of this post is inspired by a client. You should look both ways when doing a home search/home sale because of the many aspects in the home buying (and selling) process; (2)specific criteria related to the neighborhood you are buying in (or selling) and what one buys, one often eventually sells. Know the ins and outs of the home sale process before you begin looking or marketing your home for sale. An important but overlooked aspect in buying a home is considering all the implications when it is time to sell. If you are buying a home in an H.O.A., condo or co-op community, understand all the rules and regulations regarding selling or renting your home out when it is time to move. It is hard to consider such things when you are in what I call “the romance of buying”. I am working on a transaction where the sellers have to bring an extra $10k to settlement to make up the difference between the sold price and the mortgage balance. Yes, the sellers are selling their home for less money than it is worth, but they are not doing a short sale. One reason they aren’t doing a short sale is because they are buying a new home and their credit would suffer so much that they probably wouldn’t be able to get a loan for buying a new home without a guarantor. So you may ask why the owners aren’t renting their place out instead of selling it. I do think this is the right market to hold onto a home as a rental when you move just in case a seller cannot net what he or she wants and because the rental market seems to be stronger. The community guidelines say that all owners must be primary residences…this means no investors. Therefore, when it is time to move, one has to sell. A buyer needs to consider this and say this may be ‘the cost of doing business’, if when it is time to sell, he/she cannot sell their home for more than it is worth. Their situation may be different and they could consider doing a short sale. In this particular case, it has been a rather costly few months for the sellers as they just got married…paid for the wedding themselves, buying a new place and are now selling their old home at a $10k + loss. I hope that the sellers also buying at a lower price. It is hard to buy low and sell high, so hopefully the sellers get a good deal on their new home. I was asked whether it is a good idea financially to buy in this neighborhood. I said it would be a bad idea to buy this home if the plan is to move in one or two years, but a sound decision, even though the market is unpredictable, if the plan is to live in the new home for several years since the only option is to live in the home. So, please, if you are buying a home in an H.O.A., condo or co-op community, read the association documents (they may be called by a different name) very carefully to understand all of the rules and regulations of the community. Currently, there is a contingency period in the Maryland and Washington, D.C. sales contract for reviewing the documents. If you have questions, don’t hesitate to ask your realtor. And, work with a realtor who is a consultant and your advocate. If you or someone you know is thinking of moving, wants to know the ins and outs of the process and aren’t working with a realtor, I would love to talk with you about your plans and how I can make your home dreams come true. Life is good! Adam Call: (301)943-4370 301-718-4100-ask for Adam adambashein@mris.com Adam Bashein Licensed in MD & DC Weichert Realtors

Testimonial from a recent transaction

"Adam is the finest real estate professional we've had the pleasure of working with. He is extremely patient and a great listener. We recommend Adam with great enthusiasm and without reservation." Service Category: Real Estate Agent Year first hired: 2010 Top Qualities: Personable, Expert, On Time" M.R. This client recently purchased a home after nearly a 2 year home search with me. If you know somebody who is in the market to sell or buy a home, I always have time for and greatly appreciate your referrals. It may take a month, a year or two years to complete the home sale process, but I will be there for you and yours until we find the right match in home buyer (if you are selling) or home (if you are buying). Life is good! Adam Call: (301)943-4370 (301)718-4100 adambashein@mris.com www.basheinhomes.info Adam Bashein Licensed in MD & DC Weichert Realtors

Testimonial from home owner who I assisted in the refinancing process.

Details of the Recommendation: "While I applied for my refinance of my mortgage, without being prompted and for no payment, Adam voluntarily did some research on comps that I was not able to do. This was invaluvable (sp.) for my application, as it let me skip the appraisal and qualify instantly for the mortgage, saving me time, hassle, & money. I am very grateful for his help!! Thank you so much!!" Service Category: Real Estate Agent Year first hired: 2012 from Harpaul Kohli Top Qualities: Great Results, Personable, Expert My goal is to be a full service real estate agent and your real estate agent for life. This means that I am here for you and yours, whether it is for buying, selling, renting, talking about the market, refinancing and here to help in any way I can. < It is important to me that my client felt he received the same effort level as he would have if he was selling,buying or renting a home, which is how I earn paychecks. I am delighted that my efforts yielded good results for him and will be here for him when it is time to move or evaluate the market conditions again. If you or yours are in the market to buy,sell or rent real estate, want to talk about the market, evaluate the value of your home, please let me know. I am here to help and always appreciate your referrals. Life is good! Adam (301)943-4370 adambashein@mris.com www.basheinhomes.info Adam Bashein Licensed in MD & DC Weichert Realtors

Homes are selling in Potomac, MD and in Montgomery County, Maryland at an alarming rate! Inventory is low. Need owners to list their homes for sale.

From this morning's sales meeting, I learned that the market absorption rate for Potomac, MD currently is 1.74 months. As a whole, in Montgomery County, Maryland, the current absorption rate is 2.26 months. Absorption rate in its simplest terms means the rate/time it would take to sell all the homes on the market if no more homes were listed. In Potomac it would take 1.74 months and in Montgomery County, Maryland it would take 2.26 months. Sounds like a seller's market to me! If you are thinking of selling, their are buyers out there, but not enough inventory. Due to the low inventory we are seeing many multiple offers locally. It's time we talked about the market and how I can make your home dreams come true and I always appreciate your referrals. Life is good! Adam Call: (301)943-4370 (301)718-4100 adambashein@mris.com www.basheinhomes.info Adam Bashein Licensed in MD & DC Weichert Realtors

'For Sale by Owner' savings when cooperating with Buyer agents.

Through conversations with home owners who are attempting to selling their homes by themselves, rather than listing their retaining a realtor and interestingly, it never occurred to them that you can have agents bring in potential home buyers even when you are doing a "f.s.b.o." They thought it had to be either all (agent for both sides) or nothing (no agent for selling or buyer side). The fee which sellers pay buyer agents at successful settlement is determined up front. If the seller does not agree to pay the buyer agent a commission, then the buyer agent and buyer must come to an agreement on compensation if the buyer purchases their dream home, which happens to be a for sale by owner. There a number of benefits to telling buyer agents that you will cooperate with. In fact, home sellers who are not listing their homes for sale with realtors should still advertise on the internet and on their yard signs that they are cooperating with buyer agents. I saw a sign in my neighborhood that says owner will cooperate with buyers and said to myself that the sellers are smart business people to be so forward thinking. 1. Many prospective buyers are inexperienced at real estate transactions and need a lot of handholding when buying a house. Buyers' agents are good at this. We are talking about first time home buyers and buyers from out of state or out of the country even, who have never bought locally before and or never bought locally. 2. Many prospective buyers are already working with real estate agents, and are expecting their agents to show them all available houses. Unless you offer a commission, these buyers may never learn about your from their agent, unless the agent and his/her buyer make a compensation agreement if the seller will not cooperate with buyer agents. 3. Some prospective buyers are so frightened of making a mistake that they become paralyzed with indecision. A good buyer's agent can help allay their fears and coax them into making an offer. 4. Agreeing to cooperate with agents doesn't prevent you from selling to an unrepresented buyer. You can still work with buyers who don't have agents. It is just important that the seller and buyer both understand and can go smoothly through a contract and the sales process through settlement. 5. By offer to cooperate with buyer agents, you may be able to purchase from a limited service's broker/company the right to place your home on M.L.S. for sale and advertise the home for buyer agents to notice. If your home isn't in M.L.S., you are missing a huge pool of potential buyers who have agents looking out for them. All realtors should put their listings in M.L.S. and many more real estate websites to grab the biggest pool of clients, with stronger internet marketing, which is a great value. Still, if you decide not to list (at least try yourself first), put in a full effort to get your home in M.L.S. 6. You can always accept or reject any offer based on price, terms and conditions if you aren't happy with what you might net from the sale or the conditions are too severe. By cooperating with buyer agents, at least you have one person in the transaction that sells real estate for a living, has access to and knows the sales contract very well. Furthermore, the agent can coordinate and open the door for appraisal and inspections so seller doesn't have to coordinate his day schedule, which could involve staying home from work, cancelling other plans. Agents earn their commission not just through having a buyer, but being involved in the entire sales process from contract signing to settlement. I am meeting an owner tonight to review and hopefully execute a contract from one of my buyers. He is delighted that I found a buyer for his home and hopefully the deal works. Any time you want to chat about real estate, either as a seller, buyer or renter, whether you are thinking of moving, have questions or even have friends to referral, please let me know. I am here to help and make a difference. Adam Call: (301)943-4370 (301)718-4100 adambashein@mris.com www.basheinhomes.info Adam Bashein Licensed in MD & DC Weichert Realtors

Recognized for my 2011 Real Estate Production

I am proud to announce that Weichert Realtors just named me to the 2011 Director's Club, which includes agents who either sold $2.5 million dollars in homes and/or had 10 settled transactions in 2011. There are always buyers and sellers out there, in what people deem to be "good markets" and "bad markets". It is about hard work, always having time for people, listening to their wants and needs and being there whenever they are ready to make a move.

Thank you very much for your feedback, calling on me and referring me to your family and friends, who need superior real estate services. I always have time for your referrals and am there whenever you need me.

Life is good!
Adam
Call: (301)943-4370
adambashein@mris.com
www.basheinhomes.info
Licensed in MD & DC
Weichert Realtors
0. (301)718-4100 - ask for Adam

Do you know what "Rent with option to Buy" means or entails?

A number of people, mostly people who don't own homes, have mentioned to me that they would like to be in a "rent with option to buy" situation. I am enough to say that I learned a lot about "rent with option to buy" from Jody Beal, the property manager for Weichert Realtors in Washington, DC. My office was fortunate enough to have her speak a couple of weeks ago at a meeting. I have had a couple of follow up conversations and emails with Ms. Beal to make sure I have a pretty good grasp on this subject so I can have more thoughtful discussions when people bring this topic up with me.

What is "rent with an option to buy" and is it good or bad for me to enter into one of these arrangements (whether I am the renter or I am the home owner.)?

So, I wanted to share with you a few things I learned and by all please check with a property manager and/or real estate attorney before agreeing or disagreeing to a "rent with option to buy" proposal.

There are several reasons why people want to have an option to buy a home that they will rent and I am sure that below doesn't cover very possible scenario. But, it gives you an idea as a possible renter and a possible home owner.

One reason why renters want to have a lease with option to buy because it is holding a carrot of possible ownership. They want to have in writing "the American dream" of home ownership. So, why don't they just buy a house? For some it is because they don't know the neighborhood well and want to make sure they like the neighborhood before buying in the neighborhood, but they want this house just in case they decide it is the right neighborhood for them. The question I sometimes ask myself is why don't you just rent (without this option) and/or what if another home comes up that you like better when you are under this lease with option to buy agreement. I will address this in a little bit.

Another reason people pursue this option is because they don't have good credit, a good debt to income ratio and/or they can't qualify for a high enough loan amount, so at this point they can't buy. But they want to hold onto the dream of buying if a home owner will agree to a rent with option to buy. But the question that begs to be asked is if they don't have good credit or a good enough debt to income ratio, how are they going to improve their debt to income ratio by paying a premium for this option to rent? Does paying this premium increase the ratio?

Another possible reason people may want to rent with an option to buy is because they have a job and aren't sure how long the job is going to last. Perhaps the job is a contract and there is a possibility that it can turn into something "long term" at which point a person would want to go forward and buy the house. They may really like the house and want to be able to buy it as soon as their employment situation is clearer.

The last reason I will mention is that people may be in a transitional state of a relationship. Perhaps they are engaged and don't want to purchase the home until they are married or if G-d forbid they are through a troubled relationship and want to resolve the issues, make sure they are in a good committed relationship before buying a(nother?)home together.

Things to consider if you are a home owner and a person approaches you about renting with an option to buy:

When somebody approaches you and says they want to rent with an option to buy, they are basically telling you (and they may know this or not know this already)is that you cannot sell your home to somebody else besides the renter as long as the rent with option to buy contract/clause is still valid. You are in an exclusive relationship, almost promising to get engaged to somebody or you are engaged to somebody until the right time comes that you are both willing, able and desire to go forward.

As an owner,because you are being asked for this exclusive relationship, I suggest a couple of things to ensure that the people renting are financially vested and that it isn't just you being tied down to them. You should derive a benefit.

The first thing I would suggest is charging a slightly higher rent since you cannot market your home to sell to anybody else if you decide you no longer want to own the home, if it is within option to buy period of a contract. Should you go forward to a purchase,then you will apply the premium charged above the rent cost to the renter's closing costs for purchasing the home. The second thing I would do is charge a significant fee, perhaps 3% of the agreed upon sale price to enter into a rent with option to buy contract. This 3% will be applied to the purchase, but if the renter decides in the end not to purchase the home, is unable to purchase the home at the end, that 3% is the home owner's money, since the owner was locked into a possible purchase with the renter to the exclusion of anybody else during the option period.

The owner and the renter should draw a contract specifying how long this rent with option to buy period lasts. For the renter, the longer the time period the better and for the home owner, the shorter the time period the better so he doesn't have to worry about being locked in if it becomes evident that the renter cannot go through with a purchase.

As a home owner, again, you should insist on a significant fee,perhaps 3% of the sale price from the renter that gets escrowed, to give you some assurance that the people renting are actually serious...financially vested and have demonstrated a financial ability to be able to buy, but they don't want to buy the house yet.

There is usually a separate contract for a lease and for the potential purchase at an agreed upon price or the renter and owner agree to send out a couple of appraisers and take the average number as the price.

Sometimes in a rent with option to buy scenario, since the renter cannot go forward with purchase of home at the time but has every intention to, the renter and owner agree that the owner will make repairs but when it is time for certain things to get replaced, perhaps a toilet or oven, that the renter will pay for the new item since in theory this is going to be his/her house and he/she should then choose the type of appliance. This could be a negotiating point.

Something that home owners in a rent with option to buy scenario should watch out for is as the lease period comes closer to the end, the renter may be asking for bigger repairs on items that don't actually need to be repair, but they are old. For instance a renter might be trying to get out of buying a new roof in the first couple years of ownership,so he/she might say there are roof problems and the roof needs to be replaced. It is possible that the roof needs to be replaced, but I would bring out a contractor or home inspector to assess the roof, if it is damaged or not before saying yes or no. But this is why the idea that a landlord in a rent with option to buy scenario takes care of normal repairs and the renter takes care of new items for the home.

Some advantages of renting with option to buy:

*Helps buyer build down payment if owner and renter agree that portion of rent be applied to down payment if renter buys

*Again, owner of home could let renter make improvements to home to his/her liking since renter wants to buy home. Owner will still take care of standard maintenance,repairs as a landlord would

*A renter gets to know a neighborhood prior to buying...but on the other hand you don't need rent with option to buy in order to do this

*Helps renter build credit history so lender can approve you for a loan. The question though is that buy paying a premium for a rent with option to buy option, aren't you increasing your debt to income ratio?


Some disadvantages of rent with option to buy:
*A landlord may charge higher than market rent since as condition that part of that rent would be applied to down payment.

*You may lose your down payment, the 3% up front fee (or whatever you agree to) if renter decide not to go through with the purchase.

*Most of the time rent with option to buy don't come to fruition so the renter could lose a lot of not refundable money and the home owners could lose an opportunity to sell the home to somebody else (even if that person offers better terms!).

*You may want to check with a lender on the amount of closing help a home owner can give you when you buy the home...in other words, what if the lender won't allow the down payment and/or additional money applied from rent to be applied to the buyer closing help with the type of loan you want?

*As a renter,you want to make sure the owners are motivated and cooperative in doing repairs for items in the home, as he or she would in a "traditional rental situation".

By the way,if somebody has recently put their home on the market for sale, the chances are slim that he or she wants to be a landlord,which is what you are asking them to do with a rent with option to buy. My suggestion is to bring up this possible scenario to people whose homes have been on the market for a long time and haven't sold. Sometimes the listing remarks for homes say, rent with option to buy. Some homes listed for rent may also say in remarks that they would consider renting with an option to buy. Some owners might consider this if they are renting in hopes of selling when the market is better (in which case they might agree to sell at a certain point based on an average of appraisals). Other owners might be holding onto the properties as long term investments, but you never know unless you ask what their intentions with the home are.

An alternative to "rent with option to buy" is for renter and home owner to sign an agreement that the renter has the "first right of refusal" if the owner decides to sell the home. The owner may ask a renter to pay a little higher rent for this option, since a renter is getting an opportunity to match or make a better offer on a home than a potential home buyer who makes an offer of purchase to the home owner. The good news for a renter is that while he/she is paying a higher rent, there is less money to lose than in the rent "with option to buy" scenario if he/she decides not to purchase the home.

A final note on people buying homes from their landlords. At any point during the rent period,and I mean literally any point (i.e. 1 day, 1 week, 1 month, 5 months, toward the end of the lease, any other time during the lease) either a landlord can tell the renter that he/she would like to sell the home to the renter and could they agree to a terms OR the renter could tell the landlord that he/she wants to buy the home and could they agree to terms. If you go this route,then the buyer is less financially vested in the home and doesn't (a)pay a premium rent or (b)a big up front fee for the exclusive right or first right of refusal to buy the home should the landlord decide to sell when the person is renting his/her home.

I hope this blog is helpful and has shed some light on the "rent with option to buy" topic and if it is for you as a home owner or potential renter.

If you are thinking of renting and want to talk more about rent with option to buy, or rent with first right of refusal, I would be happy to talk with you. Just call or send me an email and I will be delighted to connect you.

Meanwhile, if you or someone you know is thinking of selling or buying, I greatly appreciate and always have time for your referrals.

Life is good!
Adam
Recognized Top Office Producer

Call: (301)943-4370
adambashein@mris.com
www.basheinhomes.info
Adam Bashein

Licensed in MD & DC
Weichert Realtors

301-718-4100 ask for Adam

Thank you for your kind referrals
information deemed to be accurate but not guaranteed