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

What Is a Property Tax Assessment?

In short, a tax assessment is the approximate value of your home, according to the government, used for taxation purposes.  It is NOT an appraisal, nor is it an estimate of the sales value of your home.  Homes are assessed every three years by the government, and then annual adjustments are made based on average value changes each year.

How it Works:

When you look at your property tax bill, the amount of tax you pay is based off of this assessed value.  For homes that were just re-assessed, the last assessment was in 2006, so almost all of these homes have been taxed at an assessed value that was higher than the home was actually worth.  In Charles County, just over 18,000 homes were re-assessed, and all but 6 of them had a decrease in value!

The county tax rate for residential property is $1.026 per $100 of assessed value.  This means that for a home valued at $300,000, the tax bill should be $3,780.  The average value drop on this round of assessments for Charles County was 28.2%.  That means that if a home was previously assessed at $300,000, the new assessment would, on average, place it near a value of $215,400.  The tax bill would then drop from $3,780 to $2,714, a savings of $1,066 on the annual tax bill!

Not All Good News

While the benefit of saving $1,000 or more on your tax bill is obvious, this isn’t exactly a rosy picture for residents.  You see, all that money collected from property taxes is used by the government to keep the state running.  In total, Maryland is losing $1.7 billion dollars in tax revenues from this current re-assessment, and we as residents are going to feel it as everything from school budgets to local outreach programs are scaled back or eliminated to cope with the loss of revenue.

Keep your eyes out for a post later this week about the Homestead Tax Credit, which allows owners to cap the annual value increase on their tax assessments at a maximum of 7%!

Link:  Maryland Independent Article: Property Assessments Plummet

~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

Essentially the dispute is between the County Commissioners, who want to see this project happen, and environmentalists who claim the risk of damage to the Mattawoman Creek Watershed is too great.

The importance of this road cannot be understated.  Charles County is in a state of growth due to it’s proximity to Washington, D.C..  As Charles County grows, roadways become more congested, and alternative routes of transportation are necessary to support the residents of the county.  Adding the connector will also reduce traffic across Billingsley Road, which is quite possibly the deadliest road in the area!  From a safety standpoint, I find the road to be very important, but there’s much more than just road safety along a back road in Charles County.

Population will Continue to Grow

In addition, complaints have been made that the road is not “necessary” as congestion along Rt. 228 is not particularly heavy during rush hour.  The concern is that regardless of the final decision on the connector, long term plans in Charles County clearly show plans for further development that will go through whether this road is approved or not.  If the connector is denied, population will continue to grow, and accessibility to D.C. from Charles County will suffer.

Light Rail Isn’t Realistic

The common rebuttal to this is the option putting in some sort of light rail or commuter trains in from here to D.C.  Unfortunately, what nobody mentions when this idea is brought up is that Light Rail averaged $70 million PER MILE as of 2000.  Figure 18 miles of rail from DC to Waldorf, and you’re looking at $1.26 billion, for a total county population of less than 150,000 people.  I would dare anyone to prove that light rail to Southern Maryland would be at all economical.  It’s not, period.

Protecting The Watershed

Detractors also decry the future growth and development that would happen along the road if it were to be put in.  The fact is, much of the area surrounding the proposed path of this road is in a critical watershed area. Why in pete’s name would the county allow people to build homes in the watershed.  The solution sounds simple to me. Take the state maps of the Mattawoman Creek critical area, and prevent residential building permits from being approved there.  Oh, wait, that’s already happening!

Why This NEEDS To Be Built!

In my opinion, the County has no option in order to keep D.C. accessable to it’s residents.  Mass transit cannot be supported by the current population.  Roads are needed in order to ensure people can continue to make it to work on time.

The County has bent over backwards to minimize watershed impact, to the point where the traverse over the creek itself would actually REPLACE that section of Billingsley Road, and other green building methods have been discussed and agreed to in order to reduce impact on the watershed.  At what point are people finally going to accept that this project CAN be done in a way that is financially AND ecologically sound?

~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

Home buyer searching for a great deal a new custom home on over an acre of land!

Low Prices and interest rates make this a perfect time to build your dream home!
For many people, the idea of having their own custom home built sounds like a dream.
Fact is, having a home custom built has never been more affordable!  There’s 3 reasons why RIGHT NOW is the time to look at making your dream come true:

1. Prices are low
2. Interest Rates are low
3. Tax Credits can put money in your pocket!

Land Prices have become affordable again,  and having a custom home built for as little as $300,000 is actually possible!  What does that price get you in today’s market?  Well, for starters, you can find   ready to build homesites ranging from 1-3 acres depending on your needs, and have your own custom built rambler built with 1,650+ square feet, 3 bedrooms, 2.5 baths, and a gourmet kitchen!

The Best Part about building a custom home is that you aren’t limited to the 3-4 home plans that most builders offer.  Custom home builders can create anything you want, and work with you to give your home that extra personal touch!

If you’re interested in the idea of building that “20 year home” you’ve always dreamed about, now may be the time to do it!  For more information about custom home construction, feel free to give me a ring, or visit the website  www.somdland.com to find out more!

(Model Shown is the Stafford Model by Potomac Homes)

~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

Why Should It Be Disclosed?

A mold problem in a home falls into the category of “Material Defect”.  In the state of Maryland, any Material Defects that are known by the seller or listing agent must be disclosed, regardless of the Annotated Code of Maryland, Real Property Article, Section 10-702. The catch is that the seller must have knowledge of the defect.

Banks Don’t Disclose

Banks typically avoid making any sort of disclosure, and rather sign a disclaimer stating they have know knowledge of the property and it’s potential defects.  Since the bank has probably never actually visited the property, how can they know there is a mold issue?

Banks Should Disclose

It stands to reason, however, that someone involved in selling the property (such as the Realtor who lists the property) has seen and is aware of a possible mold problem.  If there is a latent defect such as this, and it is known, then it is the responsibility of the listing agent and the owner (The Bank) to disclose such problems.  What should happen, and what does happen, however, can be two entirely different things.

Are they Trying to Hide It?

With the massive mold growths I’ve seen in so many foreclosures, it’s impossible to hide the fact in many cases.  the concern that I, as a Realtor, have is that there is a potential health risk involved in showing these properties.  It’s a weekly occurence now:  I go out, show a dozen or so moldy foreclosures, and go home with a splitting headache and nausea.  At it’s core, this is a health risk, for both me and my clients.

The concern many banks have is that mold stigmatizes a property (DUH!) and reduces it’s value.  Their risk of exposure to a lawsuit is minimal (You gotta prove they knew the home had mold), and so the less they say, the better, at least in their mind.  In the mean time, myself and my clients get to deal with the headaches, nausea, dizziness, and shortness of breath that goes along with heavy mold exposure.  Lucky Us.

~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

Is the Real Estate Market in Charles County and Waldorf finally turning around?

It’s been a long time since we saw good news in the real estate market.  In the last few years we’ve seen that home values have dropped, sales slowed to a near standstill, and foreclosure rates skyrocketed.  The good news is that national sales trends have picked up recently, and it looks like we may have finally hit the bottom of the real estate market downturn.  According to a report released on August 26th, 2009, new home sales are up 9.6% in July, and up 30% from the beginning of the year.  All of that is fine and well, but what about the local market?

The best way to look at sales trends is at the local level! If we take a look at current sales in Carrington, we can see that as of August 26th, there are 60 homes currently for sale.  of those 60, 21 are under contract!!  The national average for inventory volume is between 5-6 months, but the inventory volume for Carrington is just under 3 months!  This is excellent news for homeowners in the neighborhood!

It’s great to see sales up, but what about prices? Unfortunately, you’re not going to find that prices have risen back to the levels we saw 5 years ago.  Listing prices for homes that are UNDER CONTRACT range from a high of $299,900 to a low of $139,999.

Homes that are currently active on the market range in price from $299,995 to $145,900.  A quick look at recent sales shows a range in value from $279,000 to $126,500.  Want to know how your home compares?  Give me a call at (301)-653-8116 and request a free Market Analysis for your home!

~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

(P.S., you can click on the images to zoom in on them!)

If you have any questions or would like more information about one of these fabulous properties, please feel free to give me a call!  One of our luxury home experts can help you identify and broker an outstanding deal one your new home!

~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

May 2009

What Does This Mean?

Unfortunately, prices have fallen from where they were 12 months ago.  A quick look at the sales statistics from April shows us some promising information, however:

April 2009

The average home sales price for April 2009 was $267,170.  In may, that number was $281,235, or an increase of just over 5% in sales price!  Not only that, but there were 86 homes sold in April, and 119 homes sold in May.  That’s a 28% increase in home sales over the last month!

So we know that home sales are up, sales prices are starting to rise, but why is the market starting to look a little brighter?  Well, part of it is that prices and affordability are enticing more buyers.  That, along with 45 year lows on interest rates, as well as the $8,000 new home tax incentive, means that first time buyers are seeing value in the soft market.

It’s too early to say turnaround, but home sellers are seeing some encouraging information here!  Let’s hope that this is the start of a broader economic recovery!

~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

This program, which covers up to 90% of the original purchase price of the home, is designed to help service members pinched by deflating home values. A copy of the DoD guidelines can be found here:

Download DOD_Guidance

I’ve already listed several homes that fall under this program, and although it is not ideal, any relief for our veterans is sorely needed and appreciated!  In order to apply, please visit the HAP website and download the eligibility and application guidelines to enroll in the program!

Related Posts:

Military Relocation Relief is expanding

~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

1.    Condition Dictates Value

This means that the condition of the home will affect what the home actually sells for.  If the house is in shoddy shape, the final sales price will affect that.  Look at comps when you go to place an offer and adjust your offering price accordingly.

2.    Banks Aren’t Giving Houses Away

If it looks to good to be true, it probably is.  When you find a listing for home priced significantly below the surrounding market or neighborhood, there is always a reason as to why.  The concept of buying a livable home in Charles County or Southern Maryland for less that $10,000 is simply not true.  You can find some excellent bargains, but don’t expect to pay $200k for a home that is actually worth $600k.

3.    Home Inspections are Critical

Think about it like this:  The foreclosure process in Maryland can take a year or more.  That’s a full year where the homeowner has been unable to pay the mortgage.  If you are behind on payments and know that foreclosure is eminent, ZERO incentive to pay for upkeep and maintenance on the property.  After the foreclosure, the property then sits vacant and can develop issues related to it’s abandonment.  Always hire an inspector to go over the property with a critical eye.

4.    Great Deals Don’t Last Long

You’re not the only person out shopping for a home, and if a value priced property hits the market, you can bet there are lots of appointments be made to see it.  Make sure that your financing is in order before you start looking.  The last thing you want is to find the perfect house and then lose out to someone else who was able to get their offer in first.

5.    Bank Owned (REO) Properties Are Sometimes “Under Listed”

This stinks, but banks have been known to list properties way below market value on purpose.  They may list a home for $200k, Knowing it’s worth $275k, just to get a bidding war started between multiple offers.  They see it as a way to get the highest price possible, I see it as intentionally deceptive.  Agents occasionally refer to homes like this as “Liar Listings”.

How Do You Protect Yourself?

Get a buyers agent to represent you.  The listing agent on a foreclosure works for the bank, not you, and their job is to get the property sold while protecting their clients bottom line.  A buyers agent works at no cost to you, and their job is to help you make informed decisions and craft an offer that will save you the most money possible.

Speak to your buyers agent about the best way to prepare yourself for buying a foreclosure.  They will be able to help you get in touch with a loan officer, ensure the property you buy will conform to your loan guidelines, and help you hire a home inspector who knows what to look for in foreclosures, among other things.
With the right people on your side,buying a foreclosure is as easy as buying any other home, and the value and savings can be tremendous!

LINK: Foreclosure List for Charles County, MD as of 5/20/2009  Need an Updated List?

Questions about buying a Foreclosure? Give me a call!

~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