Strange Things That May Hurt Your Baltimore House Value

There are some things about your Baltimore home that you may have gotten used to, or don’t bother you, but could affect your house’s value.

Recently there was an article on MSNMoney where they tackled a few of these things.

Your house is different from the majority of the houses around you. If yours is the largest in the neighborhood, your value would be affected by those smaller homes around you. Buyers who are looking for that bigger home would tend to look elsewhere. Add onto that, appraisers would typically assign your home less $$ per square foot than other homes like yours in different neighborhoods.

This also comes into play with improvements. If you have put a lot of money into kitchens and bathrooms, but the neighboring houses have not, then you most likely will not get the money you put into it back when you sell.

You are missing a family room or bedroom. This goes along with “your house is different,” because if you only have three bedrooms but the others around you have four, this will affect who may look at or buy your house. Buyers have come to expect certain things from certain neighborhoods, and if your house doesn’t have what they expect, it could hurt your value in the long run.

Your house is a mish-mash of styles and updates. Your refrigerator broke so you decided to get a stainless one because it would look better over the long run. The problem is if you still have a white dishwasher, a black & white stove, and black microwave, it doesn’t show well. It could very well look like your appliances are starting to fail, and that could be the assumption a buyer makes.

Your home is showing its’ age. Are those floors really getting beaten up? Is your 50 year old front porch looking it? Those could affect value both in resale and in appraisal.

Neighbors. Some of that goes with improvements — if your neighbor tends to decorate the outside of his or her house in loud colors and designs, or leaves trash or junk around, it definitely can bring your value down.

Your Home Owner’s Association (HOA). Many HOAs make their communities better places. They make sure the outsides of houses look good, yards not a mess, and ensure that the neighbor issue from above don’t happen. Some, though, can be very strict, and that can hurt values. Why? If there are lawsuits going on, it could look like trouble. Add onto that, in the long run, it is usually the association’s dues that pay for the lawsuits….so some could worry that their dues would rise.

Your tax assessment is wrong. If square footage, number of bedrooms, or other issues are there, it could affect an appraisal on the property.

So be aware of these items that could affect your house’s value. Remember that buyers are often looking for a home, which includes the neighborhood, neighbors, and surrounding areas. Contact me for ideas on your Baltimore house value, and what you may be able to do to better yours!

Why Did My House Appraisal Come in Low?

Why did my house appraisal come in lower than contract price?

Even with comparable sales to your contract price on your house on record, if there are other homes in the area that have sold for less since then, that says to an appraiser that values are dropping in the neighborhood.

An appraiser’s responsibility is to the buyer’s bank, to show to the bank that if they had to foreclose, the value would be there to resell it.

If he or she interprets the market to be declining, it is his or her obligation to report it that way.

If there is a long time between the contract date and the settlement date, it can make this issue more prevalent, so be aware of settlement dates more than 60 days out. Appraisers right now are looking at data generally less than four months old. If your house goes under contract, and settlement isn’t due to happen for 90-120 days, then you really don’t know what the market will tell the appraiser, and you run even more of a risk.

What can you do to prepare for an appraisal?

If you have done a lot of work to your house that is outstanding and sets your home apart from others, make sure to have those receipts, so your agent can make copies of them to give to the appraiser.

Make sure your house looks good when the appraiser is due to come through. Appraisers do understand that you are moving, so some boxes are expected, but a nice, clean house helps!

Be sure to keep up on what is happening in your neighborhood even after you go under contract. Those list prices and sales WILL affect your value!

Having a professional real estate agent to guide you through this tough market is very important. Contact me for Towson real estate needs!

Foreclosure Backlog Could Lower Baltimore House Values Further

The foreclosure backlog is large, and with foreclosure filings up 33% in August over July, analysts think the real estate market has yet to hit bottom.

What does this mean for Baltimore real estate?

Well, it could mean that Baltimore house values could see further drops.

As more foreclosures come on the market in any area, the surrounding houses often see values drop. Technically, these “distressed” properties are not used as “comparables” for appraisal purposes, but the buyers/consumers see value in their own light.

Put yourself in a buyer’s shoes. Let’s say there are 30 houses on the market in one Downtown Baltimore neighborhood. 15 of those houses are foreclosures or short sales, so they are at a reduced price. Let’s say of those 15, three of the foreclosures are in decent condition, need little work, and were rehabbed just seven years ago.

Buyers are savvy and know that the banks will often negotiate on price if there are not many offers on the table.

Why would they buy a more expensive house in the same neighborhood if they can get a deal on that one?

Yes, there are some buyers who need to find homes that are in good condition due to their type of financing, especially if using the CDA program and an FHA insured loan. That buyer, though, will not be willing to overpay (and due to their loan type cannot overpay since their appraisal must come in at the contract price!) and can wait for another deal. With a large number of houses on the market, they have plenty to choose from.

With the foreclosure filings up, this still doesn’t include those in the early stages of the foreclosure process, according to RealtyTrac and a NASDAQ article.

Baltimore home sellers need to price their homes aggressively to get them sold, and stage them to make them stand out. Contact me for help. I know how to get your Baltimore home sold!

Buying Into Baltimore Homebuying Fair East 2011

The Buying into Baltimore Homebuying Fair for the East side is this Saturday, September 10, 2011 from 8:30am-2pm.

The event begins at Mergenthaler Vocational Technical High School (“Mervo”) with Check-in and Neighborhood tour sign up from 8:30-11am. There is a $10 per person charge to participate.

Home buying classes are 9-11:00am, then 11am-1:15pm are the neighborhood tours. Participants must visit at least four of the houses to qualify for the award.

What is the award? A $4,000 forgivable loan that after five years doesn’t have to be repaid, if you still live in the property you buy using that money as the primary owner.

How do you know if you qualify?

From the Live Baltimore website:

How do I get the $4,000 award?

You will be eligible for the award funds if all of the following conditions are met:

• A current homeownership counseling certificate is required. Counseling must be completed BEFORE signing a contract of sale. Click here for a list of housing counseling agencies.
• You must use this home as your primary residence.
• You close on your new home within 90 days from the event date. Contracts signed prior to the event will not be eligible for the award funds.
• Your property is within the fair boundaries.
• Your mortgage amount cannot exceed $417,000.
• You are encouraged to use a Fannie Mae or Freddie Mac approved lender.
• You must invest a minimum of $1,000 from personal funds/resources.
• Purchase contracts must be signed and dated after the “Buying into Baltimore” event, not before. Contracts signed prior to the event date will not be accepted.

You must be one of the first 50 people to meet these qualifications and submit your validated/stamped ticket, proof of homeownership counseling, signed contract of sale & photo ID to Baltimore Housing, Office of Homeownership (417 E. Fayette Street, Suite 1125, Baltimore, MD 21201).

The boundary/dividing line is:

Boundary dividing line:

Starting from the North (Baltimore City/Baltimore County Line)…

• Head South on Charles St.
• To West on 29th St.
• To South on Howard St.
• To West on Camden St.
• To South on Russell St. and continue to County Line

So if you are considering buying a house in East Baltimore City, contact me to learn more!

 

Baltimore FHA Loan Limits May Drop in Fall

FHA loan limits across the United States had been set at a higher level to help the housing market from further decline, and in September 2010 that was extended through September 2011.

The current loan limit in Baltimore County, Baltimore City, and Harford County is $560,000 for an FHA loan. This means that you can get an FHA loan of up to $560,000 for a house in Baltimore.

If the loan limit extension is allowed to expire, then that limit will be dropped to $494,500 (a drop of $65,500!)

When I think of the Timonium housing market, or Towson house values, many homes are in the $450-550,000 range, and if this extension were to expire, those from $500-560,000 no longer would qualify for FHA financing, which could hurt homesellers in a big way.

Many Towson homebuyers do not have a large percentage to put down on a home, and would need the low 3.5% downpayment program that FHA has to offer. If the loan limits drop, this could bring house values down. How?

Here’s a possible example:

Today, you meet with a REALTOR(R), and after meeting, you determine that your house is worth around $525,000. A qualified buyer using FHA secured financing can currently buy your home.

As of October 1, 2011, that same buyer would not be able to buy your house. What do you think would happen? Might their best & highest offer be $494,500, then, since they need FHA secured financing?

So what can you do? Read more details and information about the bill from the National Association of REALTORS(R). Find out who your local representatives and senators are here, and make your voice heard. Tell them that “H.R. 1754 has been introduced in the House by Reps. Miller (R-CA) and Sherman (D-CA) to make the current limits permanent. No similar bill has yet been introduced in the Senate” and that this bill needs to pass!

Baltimore Home Sellers Named One of Most Stubborn

Fortune.com recently had an article discussing the large price drops in most cities due to the bubble burst of the real estate market.

In the article, Nin-Hai Tseng used a Trulia.com report to discuss house pricing trends across the US:

f you’re a buyer or seller, here’s what to expect this spring: Detroit, with an average discount of 19%, led with the nation’s deepest price cuts during the initial listing, followed by other foreclosure hotspots including Miami, FL with 11%, Columbus, OH with 11%, Baltimore, MD with 10%, and Atlanta, GA with 9%.  Since these areas are already gravely depressed, the deep cuts could likely have long-lasting impacts on future home values.

The cities with sellers who didn’t cut deep enough during the first go-around and will most likely have to cut deeper are Phoenix and Mesa, AZ, Jacksonville, FL, Baltimore, MD and Chicago, IL.

What this says is that in general, many Baltimore home sellers are pricing their homes too high for the market to bear. Buyers are not responding, so the sellers lower their prices. When they are not lowered enough, and buyers still don’t respond, they reduce again. This, according to Fortune.com, makes Baltimore home sellers as a group one of the more stubborn, since they have to reduce more than one time before a sale.

To facilitate a quicker sale, many homeowners can price “ahead” of the market. This means lower than the other average sales in the neighborhood, because in many areas, prices are still declining. Houses that sell faster tend to sell for more than comparable homes who overpriced their homes at the beginning.

Hopefully our “stubborn” sellers will be stubborn no more!

For Baltimore real estate needs, make sure to contact me. I can help guide you in the right direction!

Should I Wait for House Prices to Drop?

A question that many buyers have been asking is whether they should buy a house now, or wait until prices drop.

Guest blogger, George Kennedy, of Wells Fargo Home Mortgage, offers some thoughts in his post.

Should I wait for prices to drop?

The question should not be whether or not house prices will fall, but whether your purchasing power will fall. A slight increase in interest rates can cost you tens of thousands of dollars on the life of your loan.

Take a look at the following example. A $250,000 loan at today’s 30 year fixed interest rate of 4.75% will have a monthly payment of $1,304. If the interest rate should rise to 5.5%, the same $250,000 house will have a monthly payment of $1,419. That is an increase of $115 per month. Over the life of a 30 year loan that is nearly $42,000.

So, the real question to ask is this….Do I think it is more likely for that house to drop in price $42,000 or that interest rates will rise by .75%?

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Thank you, George! Contact me for more information on Baltimore house values, and what an increase in interest rate versus a lower price can mean for you.

24% of Baltimore Mortgages are Underwater

A recently released report shows that 24% of mortgages in Baltimore are underwater.

A mortgage that is underwater means that the value of the house is less than what is owed to the mortgage company by the homeowners.

The national average of homes underwater is 27%, so Baltimore homeowners are faring a little better than others.

The Baltimore Business Journal shared the data from Zillow.com with these numbers from the end of 2010.

Baltimore house values dropped 9.7% in the fourth quarter, with the national average dropping only 5.9%, which is a larger negative number for Baltimore homeowners.

The drop in house values is good for Baltimore homebuyers, who may be able to get a great home for a lower price than they would have paid in the past and will pay in the future.

If you are considering buying a home in Baltimore, contact me, because now is the time, before the market recovers for sellers. Take advantage now!

This Month in Real Estate November 2010

This Month in Real Estate for November 2010 has been released.

First, Jay Papasan shared from the National Association of REALTORS that home sales were up across the United States 7.6%. We’ve seen more Baltimore houses go under contract in October as well, and once those statistics are released later this week, I will compare them to the general U.S. numbers.

Nex,t Bryon Ellington describes how renters really ARE paying a mortgage — just not their own.

There are five hidden secrets to homeownership that renters should be aware of:

1) Rent tends to rise, on average, 3% per year. A fixed rate mortgage over the same time period, would not have raised at all. Yes, there would be other costs, such as taxes, insurance, and repairs, but these costs are built into rent by landlords already.

2) You can build wealth through equity. Bryon says to think of equity as a long term savings account. Each month, if you have a fixed rate standard mortgage, part of your mortgage payment goes towards your “principle”. This means that you are chipping away at what is owed on your home!

3) You can build wealth through appreciation. This is why in a buyer’s market, such as the time we are in now, it is so important to take advantage! Appreciation can happen at a quicker rate when recovering from a “down market.” Equity and appreciation generally take time. It is long term, not quick — so realize this when you are looking to buy.

4) Currently, interest on a home loan is tax deductible. So it can help your bottom line when it comes to taxes you must pay each year. Rent you pay just goes to someone else. Interest on your home loan is deductible, technically making that payment lower!

5) You can decorate it any way you want — without having to get your landlord’s permission!
So, stop renting, and start earning!

Contact me to take advantage of your buying power in Baltimore real estate!

Final Two Reasons Why Now is a Great Time to Buy a House

Yesterday, I posted two good reasons why now is a good time to buy a house from a publication from Keller Williams Realty International entitled “7 Reasons Why Now is a Great Time to Buy a Home” , after posting the top three on Tuesday. Today round out the final two good reasons why a buyer should buy now!

To recap the top three reasons to buy a house:

1) Homes have never been more affordable.

2) Mortgage rates are at rock bottom and won’t stay there forever.

3) Prices are trending back up.

Two more good reasons to buy a home now:

4) Sellers are motivated.

5) Lenders are back in the game.

And then the final two of seven:

6) Ownership Costs are Dropping Below Rental Costs.

Though homeowners have other costs such as HVAC repairs, carpet replacements and the like, ownerships costs are now dropping to a level where even including these items, it is still cheaper than renting in many cases.

Rents have still been on the rise while interest rates and house prices have dropped. Keep in mind also that most of the time the interest you pay on your mortgage is tax deductible, so that brings it even lower over the long run!

7) Home Ownership Remains at the Core of the American Dream. People, in general, want to own their own home. Also, rent is subject to being raised every year, while a fixed mortgage is not. Taxes and insurance would really be the majority of any change in monthly payments in your mortgage, and you can build equity in your house. Meanwhile, rent is just money thrown away over the long run.

The recent decline in home sales was predictable due to the expiration of the $8,000 Home Buyer Tax Credit. Summer sales were lower than normal because of the spike in purchases earlier in the year.

Fall is trending back to normal, and before we know it, prices will be trending upward over the whole Baltimore real estate market area.

What does this tell us? The time to buy a home in Baltimore is NOW. Contact me so I can help you take advantage of these Seven Reasons!

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