I’ve had several clients recently who have come up against a common challenge in buying a home right now, and I’m not talking about tough lending standards!  It’s hard enough to be a first time home buyer in Southern Maryland;  Trying to understand the loan process can be stressful, understanding all of the moving parts involved in a real estate transaction is difficult, and now investors are coming into the market with a passion!

What’s Happening?

Unfortunately this means that home buyers are forced to compete with cash-flushed investors who are ready and willing to make a splash in real estate again.  With banks under pressure to sell off the foreclosures and REO properties they currently have, investors are quite often making the bank a deal they can’t refuse, specifically, CASH! (Rel. Link: Washington Post: Cash Investors Trigger Bidding Wars)

Investors Are Hard to Compete With

The reason investors are hitting the market so hard is simple.  There are a ton of cheap homes for sale right now!  Investors are experts at identifying great deals, and they have the ability to write offers that traditional buyers simply can’t compete with.

When an investor writes an offer, they often have the ability to write a contract that includes a proof of funds (POF) letter showing they have the liquidity to purchase cash, which means that the banks don’t have to worry about appraisals, underwriter approvals, termite inspections, or perhaps even a home inspection!

When compared to a home buyer who needs a loan to purchase the property, an investor could go to closing within 10 days, while a home buyer may need 30-45 days (or more) to get through inspections, appraisals, and underwriting.  It’s a no-brainer for the bank, a cash offer has very little chance of falling apart, and in some cases the bank may even take a lower priced offer if the purchaser is writing for cash.

Banks Are Underpricing Homes

The other issue that buyers can find frustrating right now is that banks are often deliberately underpricing foreclosure properties.  You see, banks WANT to getting these sort of bidding wars started.  By getting multiple bids simultaneously on a single property, banks can force people to offer more money on the home, using the fear of losing the property as motivation for offering more money.

What Are Investors Doing With These Homes?

What the investor does with the home depends on what their goals are.  For some, they are investing into rehabbing the property so that they can sell it in tip-top shape for a profit.  For others, they are holding on to the properties and using them as rental units.  The profit margins can be very lucrative:

Home Price: $150,000

Closing Costs: $2,500

Total Purchase Cost: $152,500

Annual Taxes: $1,400-$1,600

Rental Value: $1,450/mo or $17,400/yr

Annual Income: $15,800

Annual Return on Investment (ROI): 10.3%

With an ROI of more than 8%, the profit potential is very attractive for possible investors!  Unfortunately, until sales prices or rental values change, investors have a very good reason to be buying homes, and individual buyers are going to continue to see this trend continue.

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000 – office
301-653-8116 – cell

Charles County Real Estate Blog
SOMD Home Search
Southern Maryland Custom Homes & Land

I have a client who recently purchased a foreclosure in Waldorf, MD as an investment.  The deal itself was straightforward.  He was paying cash, could close immediately, and wasn’t asking for closing help.

The bank was insistent that we use their particular title company.  It’s not uncommon to see that, banks often like to work with one company over and over because the processors are familiar with each other, and (in theory) it should help move the transaction along quickly.

The problem was that the title company was one of those bad apples.  They forgot to show up for settlement, and in order to get the closing done we ended up hiring a notary to sign all of the paperwork and have it hand delivered to their office, which was 70 miles away.

We were fortunate to have a notary that was able to get the settlement paperwork notarized in the absence of a title officer.  We were more fortunate that they were able to deliver the paperwork to the title company that day!

The biggest lesson for us was that we will never in a million years do business with that company if we can avoid it!  The title company that dropped the ball does a LOT of business, and I had never heard a complaint about them before, so we didn’t realize how disorganized they really are.  The important thing about discovering a bad apple is knowing better than to continue eating once you find half a worm!

~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000 – office
301-653-8116 – cell

Charles County Real Estate Blog
SOMD Home Search
Southern Maryland Custom Homes & Land

How many foreclosures are available for sale in Charles County right now?

71 (See a free list of them here!) This list is sent out free every week to all of clients. Ask to be added today by calling or emailing us!

How many foreclosures in Charles County are currently under contract?

29

How many foreclosures in Charles County have banks sold in the last year?

169 (See a free list here!)

What is the Cheapest Foreclosure in Charles County right now?

$43,900- 32 Delta Place #32 Indian Head, MD- A duplex in the Potomac Heights Subdivision, recently reduced $8,000! These homes are Co-ops, which is similar to purchasing a Condo. Although the prices are attractive, they have a Co-op fee of more than $250/mo, which has to be factored in when purchasing a home there.

What is the most expensive foreclosure in Charles County right now?

$659,900- 8715 Hill Spring Drive La Plata, MD- This home is HUGE, sitting on 7 acres of land AND has an in-ground swimming pool!

Looking to buy a bargain? Give Jonathan a call and put his team of foreclosure experts to work for you! With Team Benya on your side, you can find out about fantastic foreclosure bargains BEFORE they even hit the market!
~Jonathan Benya- Realtor
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Charles County Real Estate Blog

Putting the pieces together

This blog, formerly known as teambenya.wordpress.com, has finally gotten it’s own identity! The new domain name, http://www.charlescountyrealty.com , is officially up and running. There will be more cosmetic changes within the month, and all for good reason!

As you may have noticed, this site is very similar in content to http://www.teambenya.com.  I’d like to fine tune this site to be dedicated to Charles County alone, and let the other site handle the larger region in general.  If you’re looking for Southern Maryland, check out teambenya.  If you want stats and commentary on Charles County specifically, this is the place to be!

~Jonathan Benya

Century 21 New Millennium

301-653-8116

This does NOT mean that you should skip the home inspection!  Quite the contrary, if you’re trying to buy a primary residence, the inspection is absolutely crucial!

Don’t believe me?  Well, would you buy a car without knowing it runs?  Buying a home without an inspection is the same concept.  Does the furnace still work?  Have the pipes burst?  Have termites eaten through the walls?  You just don’t know without that inspection!  I can see the marketing slogan now:

Lovely home with rustic living (furnace is shot, bring blankets), In-ground pool possible (Basement is flooded), and lots of natural light (Termites were hungry)!

Danger Will Robinson, Danger!

All you wanted was a great deal, and instead you end up with a money pit.  While the inspection won’t fix the problems, you are saving yourself from possible FINANCIAL DISASTER by knowing what sort of problems (if any) may exist.  When it comes time to write a contract to purchase a foreclosure, bear this in mind:

1. The home is being sold as-is, and
2. The bank is not likely to do any repairs on the home, so….
3. The inspection is for “informational purposes only” (That’s Legalese for: Don’t even THINK of asking for repairs!)

If you want to keep yourself protected, make sure that any inspection being done for “informational purposes only” has a “walkaway” clause.  This means that if you find something wrong with the inspection that you don’t like, you can cancel the contract, get your deposit back, and find another property that suits you.

Banks are doing everything they can to relieve themselves of liability.  As a buyer, you need to make sure that you and your Realtor are keeping your financial interests protected!

Got questions about buying a foreclosure?  Give me a call!

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Southern Maryland Real Estate Blog

In comes the concept of the low-ball offer. Low-balling is where you offer considerably less than the asking price on a home. It’s easy enough to write (You always have the right to offer as much as you think is fair), but writing the offer and getting the offer accepted are two very different things!

So how do you convince the banks to accept less than they want for a foreclosure? Well, there’s a couple of ways to increase your chances of getting that offer accepted.

With a buyers market, the more enticing the TERMS of the contract are, the better your chances of getting the deal to closing. Think about what perks you have to offer in the contract. Here’s an example of things that can make your
offer more attractive:

1. Offer a quick closing- The less time the bank has to hold the property, the better off they are.
2. Don’t request repairs- Banks are selling as is, and with a low-ball offer, structure it such that you are contingent upon an INSPECTION WITH WALK-AWAY rather than repairs
3. Avoid contingencies- If you want the banks to consider a low-ball offer, there has to be a good reason. Bogging down a contract with multiple contingencies is a good way to get the offer rejected.
4. Offer cash- With a cash offer, there’s no risk of loans not being accepted, which can be very appealing to the bank.
5. Look for homes with “market rot”- Homes that have been up on the market for more than 150 days are good targets because the bank has been holding them for longer than they would like. They probably need to lower the price, and are more likely to take an offer.
6. Write a letter- Sounds cheezy, but outlining why you’re offering this sort of price can help the bank make sense of the offer. Every little bit helps, and I’ve seen things like this actually make a big difference.

Related Posts:

What Does “AS-IS” Mean?
Waldorf, MD Foreclosure Update for August, 2008
Foreclosure Buying Tips Part 1
Foreclosure Buying Tips Part 2
Foreclosure Buying Tips Part 3

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Southern Maryland Real Estate Blog

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The Waldorf, Maryland housing market may be slow, but there seems to be a ton of buzz being generated by the local foreclosure real estate sales market!  A quick check of the Multiple Listing Service (MLS) shows that there are currently 31 vacant, bank owned (REO, or Real Estate Owned) homes for sale in Waldorf.

Here’s what’s unique about the Waldorf market:  5 of those 31 homes have been listed in the last 31 days.  In that same 31 day period, 7 foreclosed homes in Waldorf were sold by banks.  This means that more foreclosures were sold than were put on the market!

A Tipping Of The Scales?

It’s a concept of supply and demand, and for the first time in over a year, demand is outstripping supply.  Indicators like this are the early signs that we *might* be looking at the beginning of a balance returning to the real estate market.

You see, we need to see the sales volume out-pace the listing volume in order to balance the scales here.  Smart buyers are seeing the value in a little bit of “sweat equity” and buying a foreclosure seems to be the “in” thing to do for some folks.  Our foreclosure experts have been immensely successful in getting banks to cut their prices and make a deal with able buyers!

Finding A Great Deal

We have direct access to foreclosure listings and are more than happy to offer our resources, expertise, and experience to buyers, completely free of charge! Give us a call at 301-653-8116 to find out how to find a foreclosure that’s right for you, or if you would simply prefer an updated list of foreclosures, simply email me and say “I WANT TO SEE FREE FORECLOSURE LISTS!”

Related Posts:

What Does “AS-IS” Mean?
Foreclosure Buying Tips Part 1
Foreclosure Buying Tips Part 2
Foreclosure Buying Tips Part 3

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Southern Maryland Real Estate Blog

In order to apply for this program, you must:

• Have a loan originated prior to 2008
• Be paying paying more than 31% of your monthly income on your mortgage
• The program qualifies for PRIMARY RESIDENCE ONLY
• Have your income verified

The program will not take effect until October, 2008, runs through September, 2011, and here’s the kicker (There’s always a catch, right?):

Lenders can pick and choose which loans to refinance under the program!

This means that if your lender isn’t in the mood to adjust your loan, you’re out of luck!  The catch is that the bank WILL be losing money on the deal, as the loan is essentially going to be giving owners 10% equity (Loans can only be up to 90% LTV), so I would imagine that even though 400,000 people are theoretically “eligible”, far fewer are going to be given a break as the lenders will be eating crow on the deal.

This isn’t a free money deal for the homeowners, however:

If you sell during the next five years, you must agree to share 50
percent of any profits from the resale with the government. What’s
more, homeowners can only retain equity gains based on a sliding scale.

The homeowner would have zero equity from a sale in the first year,
with the amount rising 10 percent in each succeeding year and capping
at 50 percent from a sale in year five and thereafter.

The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value.

This has a big impact on OUR area because of all the military families in the area that are struggling to make payments.  If you get re-assigned in a year, you lose all of your financial gain in the home!

The entire 694-page bill can be viewed at: http://www.house.gov/apps/list/press/financialsvcs_dem/hr3221_bill_text.pdf

Want more information on the new bill, and what it means to you?  Call Jonathan Benya at 301-653-8116 and I’ll be more than happy to help explain what to do and how to do it so you can take advantage of this opportunity!

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St.
La Plata, MD 20646
301-653-8116
301-609-9000
http://www.teambenya.com

    In reality, it’s a bit more complex than that.  It seems that everybody wants a home that needs little to no work, and often those "as-is" properties seem to need something, but the seller isn’t interested in addressing those concerns.

Am I Allowed To Get an Inspection?

    Rule #5 of buying a home:  ALWAYS GET AN INSPECTION! "As-is" does not necessarily mean the house is in terrible shape, nor does it mean you cannot have the house inspected.  Think of it this way: 

What would happen if you bought a home "as-is", without inspection, and found out later all of the wiring was shoddy and the plumbing leaked throughout?  Now your walls, ceilings, and carpets are ruined because of the water damage and the house is a 3-alarm fire waiting to happen because of bad wiring.

    In Southern Maryland, you have the RIGHT to get a home inspected.  In fact, if you choose not to inspect, you should be required to sign a waiver stating that you had the option, and decided against hiring an inspector.  Why?  Because your agent needs to cover their you-know-what!

Will The Seller Make Repairs?

    Here’s a tricky situation, particularly in regards to foreclosures.  The short answer is: NO.   The more complicated response is that IF the situation is right, you might be able to get some work done by the bank, or perhaps get an escrow credit to pay for the work. 

    There are a lot of determining factors involved in getting that done, and you need to have a Realtor working on your side, representing your interests, who has experience in negotiating with bank owned properties.

How Do I Avoid Buying A Basketcase?

    First and foremost, make sure you have your own representation!  This means that your Realtor is working for YOU, not the owner!  You should have experts on your side who have seen the pitfalls and know exactly what to avoid and when they are looking at a great opportunity.  As a matter of fact, I happen to know a really great team of people…. (wink, wink )

    In all seriousness, it’s my opinion that ANYTHING is negotiable, even if the official line states "as-is"!  The  other key thing to bear in mind is that you should have the right to a home inspection, and by all means, make full use of your rights!

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St.
La Plata, MD 20646
301-653-8116
301-609-9000
http://www.teambenya.com

    Because I work with foreclosure buyers on a regular basis, I see homes with mold every week.  Often times my clients will ask me what to do about mold growth because they REALLY like the house and the price it’s listed at.

    The answer is simple:  They REALLY like the price because mold problems can be REALLY expensive to rectify.  We all know that mold likes to grow in dark, damp places, right?  It’s a safe bet to assume that if you see mold growing on the walls in a home, the growth is probably much worse on the inside of the wall.  If the mold growth is due to basement flooding, is there any chance that mold is growing around the heater or air conditioning unit?  If so, it’s possible that mold could be creeping up the ductwork.

    My recommendation is this:  If you’re looking to buy a home and it has a mold problem, the safest bet is to just move on.  Why risk your health and well-being to save a few bucks on a home?  (Bear in mind that molds such as Stachybotris are carcinogenic and have been known to cause respiratory problems, headaches and bloody noses with short-term exposure.  This stuff is potentially lethal!)

    If you’re determined to purchase, get air quality samples taken and tested.  Have a remediation specialist evaluate the home and explain the cost of repairs/removal.  Spraying bleach on the mold and calling it a day doesn’t quite cut it.  Mold can and will grow back if not properly treated and removed.

    I don’t want to sound like a doomsayer, but in all honesty, why on earth would anyone want to place themselves and their health in such a high-risk situation?

    Also, bear in mind that if a home is being sold as-is and the owner or listing agent knows that there is a mold problem, they are REQUIRED to disclose that information.  It’s what we call a "material defect" in the home.  Not disclosing that sort of information can lead to some pretty serious lawsuits, so it’s important for Realtors to understand this and "do the right thing"!

~Jonathan Benya

Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-653-8116
Waldorf and Southern Maryland Real Estate
www.teambenya.com