"Open House" - Maryland Real Estate Blog

Local Realtor earns distinguished designation to help Maryland families avoid foreclosure

Jim Ellis of Re/Max Elite Realty in Baltimore has earned the prestigious Certified Distressed Property Expert (CDPE) designation, having completed extensive training in foreclosure avoidance, with a particular emphasis on short sales. At a time when millions of homeowners are struggling with the possibility of foreclosure, the skills and education amassed by Ellis will help benefit Maryland residents and communities.

Short sales allow the distressed homeowner to repay the mortgage at the price that the home sells for, even if it is lower than what is owed on the property. With plummeting property values, this can save many people from foreclosure and even bankruptcy. More and more lenders are willing to consider short sales because they are much less costly than foreclosures.

Today, more than 13 percent of homeowners are delinquent on their mortgage or in the foreclosure process. This is occurring across all price ranges, and the fastest-growing category of homes in foreclosure is the luxury home market.

"The CDPE designation has been invaluable as I work with homeowners and lenders on complicated short sales," said Ellis. "It is so rewarding to be able to help families save their homes from foreclosure.  The best part?  Our services cost the home owner nothing." 

Alex Charfen, co-founder and CEO of the Distressed Property Institute in Austin, Texas, said that agents such as Jim Ellis with the CDPE Designation have valuable perspective on the market, and training in short sales that can offer homeowners real alternatives to foreclosure, which can be devastating to credit ratings.

"These experts better understand market conditions than the average agent, and can help sellers through the complications of foreclosure avoidance," he said.

The Distressed Property Institute provides live and online courses to train real estate professionals how to help homeowners in distress, with a strong focus on handling short sales.

"Our goal is to help as many homeowners as possible, by educating as many real estate professionals as possible," Charfen said. "Jim has demonstrated a commitment to struggling homeowners - a commitment that can provide much-needed stabilization to the community."

For more information about how you can avoid foreclosure, visit Jim Ellis' website at www.JimEllisHomes.com. 

What is a Short Sale and Do I Qualify?

What is a Short Sale

According to the Certified Distressed Property Expert (CDPE) Field Manual a “short sale occurs when: A negotiation is entered into with the homeowner’s mortgage company or companies to accept less than the full balance of the loan at closing. A buyer closes on the property and the property is ‘sold short’.”

In today’s market, mortgage companies are increasingly encouraging and accepting short sales instead of affecting foreclosures. Lenders spend thousands more to foreclose on a property than accepting a short sale. In conjunction with stricter governmental guidelines, mortgage companies are worker harder to increase efficiencies and speed of the short sale process. It is certainly getting better.

Qualifying for a Short Sale

In order to qualify for a short sale a homeowner must first be able to prove a valid financial hardship. Wanting to sell when you owe more than the house is worth does not qualify. Second, the homeowner must not have liquid cash or assets that will pay down the mortgage. There have been cases where the homeowner can cover a portion of the short sale and the lender covers the remaining balance. The short sale process is terribly complicated and requires expertise only gathered through specialized training. A licensed Realtor® with the CDPE designation behind their name is a homeowner’s best chance of closing their short sale and avoiding foreclosure. Contact the author for a CDPE in your area.

A Common Short Sale Myth

Lastly, there have been many reports, both nationally and locally, stating a foreclosure and short sale have the same outcome and effect on a borrower’s credit. That is absolutely NOT TRUE. Click here to see a free copy of our report entitled, “Foreclosure v. Short Sale: A Homeowner’s Consequences”.

Jim Ellis – Re/Max Elite Realty

Jim can be reached at 410.569.4663 or jim.ellis@remax.net.

Perception vs. Reality Series – Volume 3 Do Real Estate Agents Make Too Much Money?

I hear this a lot. "I can't believe I am paying one person so much money." Let's say, for instance, you are paying $18,000 in commission (Oh, by the way, commissions are 100% negotiable) on your $300,000 house. Wow!! That does seem like a bunch of money. I would certainly agree that is too much for one person for that house price. But this is how it actually works.

First, commissions are not paid to a person; they are paid to the brokerage or company that you hire. The brokerage typically keeps a percentage of that commission and disperses the remainder back to your individual agent.

Second, that entire commission is not earned by one company. Commissions are generally "split" with the company who represents the buyer of your home. It is customary in Maryland that the seller of each home offers a commission to their agent and the agent who brings a buyer. That means that a portion, generally half, of the overall commission is paid to the buyer's company. That is why it always makes sense to hire an agent when buying a home. Your agent's commission is paid by the seller. Services for free!

Ok, so consider our scenario listed above. You have agreed to pay an $18,000 commission and, as we now know, only half of that will stay with your agent's brokerage.  That leaves $9,000 for your agent and their company.  Let's assume the agent has an agreement with their company to keep 50% of each commission. That leaves $4,500 for your agent. Doesn't sound bad, huh? Well, first you have to pay income tax. You have to remember, Realtors are all independent business people. Taxes are not automatically subtracted from "paychecks". Let's assume 33% for taxes, FICA, and other government withholdings. That leaves $3,015. Health insurance is expensive at around $250/mos.; leaves $2765. Since agents are all independent business people, all expenses are the responsibility of each individual. For me, personally, I spend about $3,000-$5,000 (depending on how many houses I have for sale) per month on fees, dues, subscriptions, advertising, office supplies, etc. etc. Let's say I spend an average of $4,000; that leaves negative $1,235. NEGATIVE!

Oh yea, I also own a house, car, like to eat food at least once a day and take a trip from time to time. Include personal expenses and I am way in the hole with one house sold. So as you can see, $18,000 very quickly turns into a negative number for an agent. Agents who sell one house per month generally don't survive in this business. Many people jump into real estate thinking it is easy and can "get rich quick". I can tell you, it is not easy and every penny earned is most definitely deserved.

Jim Ellis – Re/Max Elite Realty

Jim can be reached at 410.569.4663 or jim.ellis@remax.net.

Your House is Not an ATM

As we near the end of this incredible buyer's market and head into a renewed period of  housing appreciation, there is something I need to get off my chest.

Your house is an investment in your future.  Something that should be nurtured and cherished for years and years.  As your home increases in value over the next several years, make me one promise.  Do not extract equity for trips, cars, paying of credit card debt, or any consumer purchase.  If there is one thing we should all have learned from these last few years of housing decline is that we can never predict the ups and downs of any investment.  During the years of prosperity, leave it alone and enjoy it from a far. 

I've sat down with so many homeowners over the last several years who could not sell their home because they owe more than the house is worth.  Some folks simply bought their house at the top of the market and were victims of the decline.  Others, however, who had bought earlier in the decade or sooner, used their equity for fun.  They were now stuck in a home they no longer wanted or could afford.  Some are sticking it out, many have gone to foreclosure and others sold and had to bring money to the settlement table to satisfy their debt. 

I hope this makes sense!  If not, don't be afraid to ask.

Are Interest Rates About to Rise?

Federal Reserve Bank of New York President William Dudley says the central bank will scale back its purchases of mortgage-backed securities late next month. While interest rates likely will climb when the program ceases, the extent of the rise remains to be seen.

Dudley says the Fed will act if rates spike too much. Still, analysts worry that the end of the MBA purchase program and expiration of the home-buyer tax credit, along with higher premiums and tighter underwriting of FHA mortgages, will work together to stifle home sales and price stabilization in the coming months.

Source: Inman News (02/08/10)

Census: Americans Stayed Put in 2009 - National News

Fewer Americans moved in 2009 than any other year this decade, the U.S. Census Bureau reported this month.

Population also grew less this year than any other year since the turn of the 21st Century. It reached 307 million on July 1, up less than 1 percent from a year earlier, the bureau says. About 850,000 people immigrated from other countries, down 15 percent compared to 2006.

The losers in this trend included Florida, which lost 31,000 people to other states, a first for the Sunshine State, which used to be No. 1 in attracting new residents. "The middle of the decade's huge surge to the Sun Belt stopped on a dime," says demographer William Frey of the Brookings Institution.

Demographers say real estate is one of the big reasons people are staying put. "People are trapped," says Yi Zhao, senior forecasting coordinator for the Census Bureau in the State of Washington. "They can't sell their house or they have a hard time getting credit for a new one."

Source: USA Today, Dennis Cauchon and Paul Overberg (12/23/2009)

How to be a Victim of the Federal Government While They are Trying to Help You

Let's say you have a 730 credit score, an established credit history, and over $20,000 in cash. Let's say you want to buy a house and are approved to purchase a home over $200,000. Let's say you make an offer on a condo around $150,000 and get a great deal to include all of your closing costs, a reduced price and other favorable terms. You are very excited about the purchase of this home and can't wait for a pre-Christmas settlement.

Then along comes the big intrusive monster; the Federal Government. For the purposes of this blog we will call them Grendel.

The $8,000 tax credit, while a great opportunity for many of my clients, may not be the best way to help the housing problem. I believe we would all be better served if Grendel would make an investment in easing lending guidelines. Obama has asked banks to lend more money, but isn't investing anything into helping them do so. Also, rumors have it that the Federal Housing Administration (FHA), the government organization responsible for backing today's most viable first time home buyer loan, is poised to make lending of their backed mortgages more difficult over the coming months.

In the example above, this buyer was unable to secure a conventional mortgage because the tightening of guidelines didn't allow her to use lottery winnings as part of her required money needed for the transaction. Plan B: We try for an FHA backed mortgage. Because of a complicated and unnecessary red tape scenario with Grendel, my buyer isn't able to purchase this property with that mortgage either.

This is a HIGHLY qualified buyer who can't purchase a home well within her price range. There is something wrong with this picture. Before the housing market will turn around, mortgage guidelines have to be at a place where people who SHOULD be able to buy are able to secure a loan. The housing inventory has been shrinking over the last few months, but it still remains near record levels. Want housing prices to go up again? Then the inventory must be shrunk. Want the inventory to shrink? More potential buyers need to be eligible to receive financing. I'm not suggesting that my two year old be able to get a mortgage (like 2004-2006), but easing the guidelines a little, could have a dramatic effect on getting this market turned around faster.

My two cents . . .

This blog entry was written by Jim Ellis of Re/Max Elite Realty in Baltimore, MD. Jim can be reached at jim.ellis@remax.net.

 

Report: Home Prices Likely to Hit Bottom in March - National News

Home prices in 45 of the largest housing markets are expected to fall another 4.2 percent before they hit bottom in March, according to First American CoreLogic’s LoanPerformance Home Price Index.

By October 2010, prices are expected to be heading upward again by about 1 percent compared to 2009.

The report warned that this progress could be jeopardized by an increasingly large “shadow inventory” of homes owned by banks but not yet on the market. The problem is particularly acute in Michigan and Ohio cities, the report said. It projected a 12.7 percent further decline in values in Detroit, an 11.4 percent decline in most of the rest of southeast Michigan, and a 6.3 percent fall in Cleveland.

The report expects the strongest recoveries next year in California cities. These include:

1. San Francisco, up 5.7 percent
2. Los Angeles, 5 percent
3. San Diego, 4.7 percent
4. Sacramento, 4.6 percent

Source: Inman News (12/21/2009)

Home Buyer Tax Credit Extended

 Congress has just approved a measure to extend the $8,000 first time homebuyer tax credit until April 30, 2010 and to increase the income limitation for single purchasers from $75,000 to $125,000 and for married purchasers from $150,000 to $225,000. 

Congress has also approved a new $6,500 tax credit for existing homeowners who purchase between the date of enactment and April 30, 2010.  Existing homeowners are eligible for the credit if they have used the home being sold as a principal residence for 5 of the previous 8 years.  Homes purchased using the this tax credit must be less than $800,000.   

The President is expected to sign the measure into law on Friday, November (6), 2009.

As posted by the GBBR, Greater Baltimore Board of Realtors.  Released in an e-mail on 11/5/2009.

Dundalk Townhouse - SOLD!

7911 BANK Street Baltimore, MD 21224 7911 BANK Street This 3BR end unit town home is well maintained and ready for you to move in. Convenient to I-695, shopping and restaurants. Easy commute to downtown Baltimore, APG, White Marsh and Columbia. Interior Features: Appliances, Central Air, Laundry Room, Family Room. Exterior Features: Shed/Barn, Deck/Patio, Fenced Yard. Custom Features: Convenient Location : Close to Mall and Major Interstates Quick Sale : Not a Short Sale or Foreclosure Excellent Condition : Fresh Paint and Move-in Ready Nice Yard : Large End Unit Lot with Shed Price: 124,980 Type: Condo/Townhouse for Sale Floors: Multiple Bedrooms: 3 Baths:1 Square Feet: Approx. 1080 Year Built: 1955 MLS #: BC7161610 www.7911bankstreet.z57websites.com www.7911bankstreet.z57websites.com For more information contact: Jim Ellis Phone: 410.569.4663 jim.ellis@remax.net Copyright © 2009 Jim Ellis . All rights reserved.