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

Testimonial from a satisfied customer who I recently completed 2 real estate transactions with

Throughout both the purchase of our new home and rental of our old,
Adam Bashein was there to help us every step of the way.

Adam was extremely attentive to our interests, patiently taking us to see
several homes and always listening to our opinions and concerns.

Adam was indispensable during the actual contract and closing
process--guiding us through what might have otherwise been a difficult
experience.

Most importantly, we always had the sense that Adam was
on our side, and looking out for our best interests.

Thanks to him we got the home we wanted at a price and under conditions that we were
comfortable with.

When it came time to rent our old home, Adam had a
renter lined up in a matter of days.

We were extremely pleased with our experience working with Adam, and would recommend him wholeheartedly to anyone looking to buy, sell or rent a home. Josh & Adina Obstfeld, January 2012.

If you or yours is thinking of selling, buying or renting a home, now is the perfect time with the spring market upon us. I always have time and greatly appreciate your kind referrals.

Life is good!

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

I am ready to sell my special and unique home.

It is fairly common for home sellers to feel their homes have special qualities and attributes, both tangible and intangible, so they can rationalize pricing their home at a higher point than other similar homes in the area that are on the market or have sold (more emphasis on the prices of homes that have actually sold).

How can home sellers prepare themselves for the market and position their homes so buyers will see the added value in their homes and want to buy their homes at or near the asking price?

Here are a couple of suggestions:

*In advance of getting your home on the market bring in a professional appraisor to see what in his/her professional opinion the home is worth. This is a good investment whether you have no idea where your home should be priced or if you and your realtor have a big difference of opinion on what the list price should be.
If he/she comes in at or near the price you think the home is worth, then you may be spot on with the pricing.

If a buyer purchases a home with a loan, then the home is going to have to appraise at the sales price otherwise the buyer won't get a loan at the purchase price and may choose not to buy the home unless the seller agrees to reduce the price to what the home appraised at. It's possible that the appraiser assigned to the buyer's loan will come in at a different price opinion than the seller's appraiser, but at least you have a basis for where to price the home and if the appraisers come in at difference price levels, the buyer and seller can agree to split the difference in price. If I listed a home where the seller got an appraisal in advance, I would note that in the listing remarks and if I was able to connect with the buyer's appraiser which isn't always possible, I would give him/her the appraisal report as well to show what another expert in his/her industry came up with. If home doesn't appraise and buyer loves home and would otherwise agree to price, offer owner-financing.

*Offer closing help to the buyer.

*As a seller, if there are homes on the market that are similar to yours, as the home seller I would look at them so I have a feel for the competition beyond and can see for myself in person, beyond the internet, newspaper and what people tell me, how the home compares to your home. Ask yourself what you would pay for that home.

*List all of the home improvements, repairs, anything that is particularly new (i.e. a new kitchen, new windows, and new roof, so buyers appreciate the extra value.) If there are short sales and foreclosures nearby that are listed for sale, often such information is not available at foreclosure and short sale listings. So in addition to appreciating how well you have kept your home, buyers may have more confidence in buying your home than foreclosures and/or short sales.

*Make sure to point important features about the neighborhood itself and if it is near the highway/beltway, public transportation, if it is particularly close to large office buildings, medical centers. Think about and list destinations near your home that add value and may be an extra selling point for buyers.

*If you bought a new home or have a new home under contract, know how long you can potentially manage the financial obligations and upkeep of both homes (mortgages - if you don't own your current home outright and/or bought your new home with a mortgage) ,utilities, condo fee/H.O.A. fee(s) if applicable, maintenance and repairs, etc). That will help you from a financial perspective determine if it is a good decision to try pricing your home at one price point and seeing what happens for a short period of time before adjusting the price to other homes in the market, if you don't get the desired results. Talk to your financial planner/advisor.

*Agree to list your home at the price you want and if the home doesn't get much buyer traffic or any offers in the first couple of weeks, agree to reduce the price closer to market. Agree to a series of price improvements if you aren't getting desired results on your home at certain time intervals (i.e. every 2/3 weeks evaluate the situation or less if other homes are going under contract!) The worst thing that can happen to a seller is deciding to test the market and seeing if he/she can get a higher price than what other homes are selling and by the time that he/she agrees to reduce the price to what other like homes were listed for, those homes also went down in price so you are still overpriced. Talk to your realtor at least weekly for a market review.

*Monitor foreclosures and/or short sales in your area and you are concerned that buyers will offer you prices based on those active foreclosures and short sales rather than based on your homes value, then wait for those homes to sell. Foreclosures tend to be priced aggressively so banks can get the homes off of their hands. The challenge is that you never know when the next foreclosure and/or short sale will come on the market. On the other hand, to reiterate what I said above, if you have good records of the improvements and repairs to your homes, then more buyers will be drawn to your home than to the short sales and foreclosures, where you often don't have records to such information.

*Consider staging your home...which could mean moving furniture around, placing a runner on your dining room table, folded towels in the bathrooms and/or hiring a professional stager to help you. A number of stagers rent out furniture that they feel will help make your home stand out to buyers and get desired results. Consider painting rooms in more neutral colors. Replacing old worn out wallpaper and painting where the wall paper was. Depersonalize the home so there aren't family pictures everywhere. Keep it to a minimum. On the one hand you want buyers to see that you loved living in the home. On the other hand you want the home to feel like it is ready for them and want them to focus on the features of the home rather than the family portraits. The home should have a warm, cozy, well kept and classy feel that will move buyers to loving your home. And make sure your home is kept neat all the time. If you are serious about selling, your home needs to look and feel pristine, special and a great value to every home buyer who comes through it.

*Make sure your home is easy to show, whether it is a Sunday afternoon or a Tuesday evening after work, rain, snow or shine. If a home is hard to show, some buyers and realtors will decide your home is not worth the effort in coordinating showings.

In summary, if you want the list price of your home to be above what other like homes have recently sold for, I suggest bringing in a professional appraiser, preview the competition and have a plan for systematic price reductions if you don't get offers by certain dates. If you reject an offer and a second offer comes in at a similar price, I suggest you take or negotiate the offer because that tells you what multiple buyers think your home is worth. If you won't work with the second offer, then you should probably take your home off the market. Before listing your home, if you have a new home purchased or under contract, review the numbers and talk with a financial planner about the costs of owning 2 homes and how long you can comfortably do so (and factor that into when you would agree to price reductions if you don't get offers on your home). Have a copy handy of all the repairs and home improvements made to your home so buyers can see what you have done in comparison to other homes that are on the market or recently sold. If there are foreclosures or short sales that may hurt the value of your home, consider listing your home after those homes go under contract. Make sure your home shows well and is staged to feel, warm and cozy. Remember, your real estate agent is working for you. If he or she doesn't deem your home to be saleable by price and/or property condition and that you won't agree to improve either of these over time if your home doesn't get a contract, then he or she may not want to list your home.

If you or someone you know is considering selling their home and is looking for a full service agent, give me a call. All appointments are personal, professional and confidential.

Life is good!

Adam
adambashein@mris.com
www.basheinhomes.info
CALL: (301)943-4370301.718.4100 - ask for Adam
Adam Bashein
Licensed in MD & DC
Weichert Realtors

Testimonial from another satisfied customer who just bought a new home

When we decided that we wanted to buy a condo near to our daughter's family, our choices were extremely limited. We were specifically hoping for a "short sale" or "foreclosure" unit in University Towers. Our daughter suggested that we call Adam Bashein, because (in her words), "He's the kind of agent who will really take care of you." How true that proved to be! Adam had endless patience with us. We had so many questions, which he answered clearly, thoroughly, and responded quickly to us, whether we were reaching out to him via email or phone.


"We had spotted a "short sale" unit on an internet listing. Adam immediately informed us that that unit was already under contract -- but from that moment on, he was on the lookout for something for us. Several days after our initial inquiry, Adam was back in touch with us: The condominium we were interested in was back on the market! He arranged his schedule so that we could see it as soon as possible, and then we gathered in his home office to fill out a contract. Unfortunately, at the same time someone else filled out a contract for more than the asking price, and thus they got the contract.


Adam started using his experience and detective skills, checking into units that he thought might be coming onto the market soon. However, before anything came of that, he again called us with exciting news: "Our" unit was back on the market! The people who had outbid us for the contract had not been able to secure financing.


Adam than helped to steer us through the minefield of rules, regulations, and necessities prior to settlement, helping us to understand the language of the settlement documents and to make changes where he or we thought it was necessary. There was great pressure on us, because the sellers wanted to settle before the end of November and we did not feel we could settle until we had had a chance to go through the condominium documents (as required by law). Adam was able to negotiate a delay of settlement into the first week of December, giving us time to receive the condominium documents and go over them.


In summary, we are extremely grateful to our daughter for having recommended that we call Adam. He is a delightful person to work with, who helped to turn what could have been a tense and miserable situation into a pleasurable experience -- and (most important of all!) made it possible for us to purchase our condominium."


Ann L. Parker
and
Theodore S. Parker

-------

If you or somebody you know is thinking of selling or buying a home,let's talk about the market. I am here to help and it would be an honor to work hard for you.

Life is good!

Adam
adambashein@mris.com
www.basheinhomes.info
CALL: (301)943-4370
o.(301)718-4100 - ask for Adam
Adam Bashein
Licensed in MD & DC
Weichert Realtors

Should you be buying a home or investment property with the recent report of apartment vacancies down and rental prices up?

www.bloomberg.com/news/2012-01-05/u-s-apartment-vacancies-decline-to-a-decade-low-of-5-2-rents-increase.html - good article about the strong rental market.

Have you been renting a home/apartment? Have you noticed that the rental prices have been going up? If so, you should talk to a lender,see how much of a loan you can get approved for and if your monthly rent would come out to being more or near the same dollar amount as buying a home and having a potential mortgage (and condo fee/h.o.a. fee if applicable). If you don't plan on staying on the area for a long period of time,then maybe renting is the best scenario for you,since we can't predict what your home would be worth in a year or two. On the other hand,you should also consider buying the home and if you move to keep it as an investment property. Evaluate this option with a financial planner or somebody close to you.

Have you thought about "moving up" to a larger spacee or "downsizing" because you have 'too much house', but are uncomfortable making a move now because of the market uncertainty, concerned at what price you can sell your current home? This is a great market to move up in for sure and it also a perfect time to think of "holding onto" your current home and turning it into an investment property because of the demand for rental homes verses the availability of rental properties (based on community you live in). Consider if you would be happy with what you would net in a home sale and if a potential monthly rent would cover your current mortgage or come very close to covering your current mortgage (if you haven't paid off your mortgage). If you are not happy where you would net on a potential home sale, especially if you could lose money on a sale, then holding onto your home as an investment propety may be a good solution. If you are happy with what you would net on a home sale, then the question that also comes into play is if you want it to be a long term investor or short term investor,verses just selling the home. The risk in holding onto a home where you are happy with the potential net proceeds on a sale today is that the home may not be worth the same in a year or two. The value can go up or go down. Also consider where you would put the money from a potential sale and if you would get a good or bad return. Talk to me about your home and we can evaluate the sales and rental market

If you have thought about buying an(other) investment property>,this is a great time to get in the market. It is a good supply and demand situation for landlords. As the article above shows,apartment vacancies are down and rental prices are going up. So you could have a large pool of potential renters and command a strong rent. There are good deals out there...a good supply of homes and amazing interest rates.
Around and in the Washington, DC area is a great location to own an investment property as many people move for jobs (including gov't jobs,jobs with the embassy, jobs in political offices) internships and school. If these people are not committed to living in the area for a long period of time,then they would be great potential rental candidates for you.

It is a great opportunity to add a piece of real estate to your portfolio, as both a place to live and a place to rent our,if the timing is right for you and it also works for you financially. I urge you to talk with a lender and financial planner.

I'd love to talk with you and yours about the home buying process both as a primary residence and as an investment property. I am here to help and always have time,greatly appreciate your referrals.

Life is good!

Adam
adambashein@mris.com
www.basheinhomes.info
CALL: (301)943-4370
(o)301-718-4100 - ask for Adam
Adam Bashein
Licensed in MD & DC
Weichert Realtors

Similarities between renting your home to a friend/local person and a foreigner

I had an interesting conversation with Jody Beal, the Property Manager of Weichert Realtors in Washington, DC to discuss evaluating an out of town rental prospect for one of my listings.

One of the challenges with a potential renter who is moving to the area from out of the country is that if you run a credit check on them, they may have no credit history in the United States. So another step in evaluating whether a rental prospect is a good fit for your home financially is through verifying income. This could be challenging with someone who is not from the country. There may be some skepticism because of internet scams. So, what can you do? One thought is to tell the person you want copies of bank statements from the institutions they bank at as one mechanism to verify income. I also insist that the prospect give you a letter from the local employer he/she is moving to the area for, which verifies the person has a job and states the income. On its face you look at the ratio of the rent to the person's income to see if it the rent you are charging looks attainable for the potential renter and then you contact the employer to actually talk to a person in human resources to verify the employment, as a letter can be falsified.

As far as security deposit and upfront rent, you should either ask for cashier's checks or if you get a regular check, allow enough time to pass that you can see the
potential renter's security deposit check clear and not bounce.

Some people are skeptical of renting their homes out when they can run a credit check or know the credit rating will come up low for a potential renter. So they may not want to rent to someone who is moving to the area from out of the country. But if this is your thinking, then there may be a fair housing issue if you decide to rent your home to a friend or local who has never rented a home before, maybe just got out of college/moved out of family's house and has no credit history. Or the friend/local might have just lost his/her home to a short sale/foreclosure so the credit rating was damaged. But if you would still rent to this person but not rent to someone from out of the country due to credit issues, there maybe a fair housing issue.

If a foreigner finds out that you rented your home to a friend/local who has no credit or bad credit after you turned the foreigner down because he/she had no credit, he/she may have a claim against you. You can't simply say the person is a friend/local so I feel more comfortable. You certainly can't say that to your realtor or he/she has to tell you that might be a fair housing issue and refer you to a property manager, a real estate attorney. One solution for choosing a friend/local to rent your home when this person doesn't have credit history or has bad credit is to get a guarantor to also sign the lease (that the rent is guaranteed by another party of the renter doesn't have the money). But, then you might need to propose to a foreigner that he/she gets a local guarantor to sign the lease. You really need to ask a property manager and real estate attorney these questions.

It is a great market to own an investment property, whether it means purchasing a new investment property or buying a new home and keeping your current residence as an investment property. You just to be familiar with the local laws regarding renting houses and get a realtor who can help you find a renter in the quickest and profitable fashion. I am here to help.

Life is good!

Adam
CELL: (301)943-4370
o. 301-718-4100 - ask for adam
adambashein@mris.com
www.basheinhomes.info
Adam Bashein
Licensed in MD & DC
Weichert Realtors