Larry Riggs

Anyone listing and selling real estate, whether agent or owner/buyer can tell that foreclosures are affecting property values. Certainly this begs the question, isn't it in the banks' best interest to get top dollar for their inventory?

The answer may surprise you!

Recently I was in contact with a local appraiser who expressed his frustration at what he referred to as two sets of data. The first is normal sales between a willing buyer purchasing from a willing seller and the other is bargain hunters buying up foreclosures. The problem is that, as foreclosures become a larger percentage of the market, the appraisers cannot ignore such a large portion of the comparables. Unfortunately at this point the banks are dealing with such a large number of REO's and short sale requests that they're choosing to fire sale the foreclosures. Most are getting BPO's from local agents and deducting 15% for a quick sale. Of course this hurts the seller who has a job transfer or especially those who may want to downsize.

So what's the solution? If you are thinking of a move and have a house to sell you may want to wait a bit. The exception to this is the move up market. If you want to move for instance, from a townhome to a single family this is the perfect market of you. If you take a hit on your townhome to sell and negotiate a similar percentage hit on the single family you're money ahead.

Of course the best scenario in the current market is to be a first time buyer. You have the $8,000 tax credit if you settle before December. You can usually negotiate some closing help from sellers in this market and rates are great.

All in all, this too shall pass. Our market is and always has been cyclical. The one think we can count on is that change is coming.

Thinking of buying in Frederick County? There is a special new program about to come on line to purchase REO properties in Frederick County. The program is funded by the federal Neighborhood Stabilization Program (NSP) in conjunction with the Maryland Department of Housing and Community Development's Neighborhood Conservation Initiative. This program is for bank owned properties in specific targeted areas in Frederick County.

The program gives loans from $15,000 - $25,000. These are 0% interest loans for owner occupied purchases and the loans are forgiven after 15 years. The specifics will be posted on the Frederick County website at www.co.frederick.md.us/nci Although the site is not open yet you can go there and sign up to be notified when it opens.

The initial program offers a $15,000 loan for the purchase of the REO properties in targeted areas. A bonus offer of an additionsl $5,000 is offered for buying in "severe" targeted areas and an additional $5,000 bonus loan is offered for targeted employees. Those targeted employees are:

Fulltime emplayees of

City of Brunswick

City of Frederick

Frederick Community College

Frederick County Public Schools

Frederick County Government

Frederick Memorial Hospital

Maryland State Police - Frederick Barracks

Frederick County Volunteer Fire & Rescue Association, meeting LOSAP requirements

Only Realtors and Lenders who have been through the training and are approved can help you with this program.

Many of the foreclosure and short sale listings I have been showing recently are desperately in need of major cosmetic surgery. I must confess, I haven't done an FHA 203K loan in several years so I was operating under the assumption the rules were still the same. In fact they are, but for the 203K streamline they are much easier to work with. For one thing, you don't need a 203K inspector because the streamline loan is primarily for cosmetic work. I just showed a listing yesterday that needed about 10K in carpet, flooring, paint and drywall repair. This wouldn't normally qualify for the 203K program because it didn't have at least $5,000 in FHA required repairs. However it's perfect for the streamline product. Here are some details:

Cannot exceed $35,000

203K Consultant not required. Only a home inspection and two separate bids

No structural work allowed. Also no plumbing, electrical. I'm assuming permitted work since cosmetic is acceptable

Can include: Painting, Carpeting and other flooring, appliances, windows, doors, countertops etc. Again pretty much anything cosmetic.

If, like I, you are showing properties in pretty sad shape, check with your local lender about this loan product. As with the regular 203K the rate is slightly higher but not by much. If you have a buyer that is low on cash, qualifies for an FHA loan but is frustrated by what they are seeing as far as property condition you should let them know about this option.

Very often I hear agents talking about their frustrations with buyers. With so many homes on the market now, how does one select which house to make an offer on and how much should that offer be in relation to list price.

For the agent, the key is listening and guiding but allowing the buyer to make their own selection. Just a couple of days ago I was chatting with someone who recently bought a home and we had a good laugh over their selection process. True story. I was working with a couple who were taking copious notes on each house we toured. (This was in my early days as an agent) Finally I turned and asked the buyers if they had any intention of making an offer on that house. I asked because it was clear from their body language inside that they did not like the property. They said "no" so I told them to stop taking notes, fold the printout in half and set it aside. I explained that after a few properties they would all start to run together so only take notes on real possibilities. After each home discuss which home is at the top of their list for that day. At the end of the day, there is one clear winner. There may also be others in consideration but they know which one they liked best and put the ones they didn't like out of their mind.

For the buyer, another true story. I've had many buyers, over the years come in with a list of what their house was to have in it. I learned to tell them to hold on to that list and compare it to the house they actually bought. They never matched. Here is the barometer I tell my buyer clients to use. Obviously the house has to be a fit. If you have four children, don't buy a two bedroom. On the other hand, if the house has everything on your list but you don't like it. It just doesn't feel right. DO NOT BUY THAT HOUSE. You will hate life every day when you come home. Buying has some logic (bedrooms, baths etc.) and a lot of emotion. You have to "feel" at home in the house. You may even fall in love with a house that isn't a perfect fit but you're willing to do the necessary improvements to make it what you want.

The offer. In many places across the country we are in a buyers market. Note there is a difference between negotiating the price because of the market and thinking the seller is in such a desperate situation that they will give the house away. In fact, I have seen sellers become so offended by very low offers that they refuse to deal with that buyer at any price. Depending on your state's laws you may have an agent representing you exclusively. They can show you what similar properties have sold for and help you structure an offer that is best for you and likely to end up in a successful real estate transaction.

A word about short sales and bank owned properties. If you are looking at short sales make sure your agent is familiar with the process. It can be a rather lengthy process however the average time seems to be shortening a bit as both lenders and agents become more familiar with this type of transaction.

Bank owned properties are usually easier to deal with than short sales but they can also have some pitfalls. Those usually involve securing clear title and property condition. The bottom line is to learn as much as you can from your real estate professional about the market, the loan process and what is involved in each type of transaction.

Ever notice when you face a crisis or important decision you're suddenly surrounded by "experts"? I once heard a saying, I don't remember where I heard it, but it said, "armchair quarterbacks never throw interceptions" Of course they never throw touchdowns either. I've done a lot of teaching and training in my career and I always had one rule for what I taught. Either I've used what I said and it worked, or I learned it from someone else who used it, and it worked. The important thing is, somewhere it worked. I have never taught, nor will I ever, from the hip. So let's look at some scenarios where our friends the ACQ's come out.

If you're an agent, they're the coffee drinkers with all the designations and no sales. (In some cases they don't even have the designations) They would have sales but times are tough, the rates aren't the best, inventory is too high, consumer confidence is down, etc etc etc. Then there are the agents who are too dumb to listen to the experts. They're too busy listing and selling in spite of the conditions. (Whatever they are at the time)

AND...even though I got trashed the last time I said this, let's not forget the media. Daily there is misinformation given out about loan programs, credit availability, market conditions and more. Who is giving this sage advice? People who have never sold any homes, written any loans or inspected any houses. You know the drill. The sad thing is, many Americans believe them and, as a result, miss out on some great opportunities.

Not long ago, I heard some advice for those of you in the stock market. It went something like this. The market is down so get out while you can. Now let me think about that. Long term, the market historically recovers. So let's sell now while things are low and then get back in when things are better. That way you not only have the loss the market imposed. You also just bought stock for $100 that you sold for $25. No further comment necessary.

How about you buyers and sellers out there. Do you have family experts? First let me say that, if you do, they love you and mean well. Unfortunately all that emotion poured out to you doesn't mean they're right. I think every Realtor out there who has been in this business any length of time has stories about the caring parent, uncle, cousin etc. who inspired you to make that low offer that insulted the seller and now the seller wouldn't negotiate with you if you were the last person on earth. Or the caring soul who advised you to list your home with a little "wiggle room" Now it's been on the market for a year but you still have room to negotiate.

So what do you do? Back to my teaching philosophy. Find out what works. Agents, stay away from the coffee machine and get around good solid training. Hang around agents who are actually having settlements. Buyers, find a Realtor who will provide you with accurate market and loan information. It's a buyers market but be careful of agents making outrageous claims about how much they can save you. Whatever you do, don't listen to TV experts who have never sold a home! Sellers, find a Realtor who will show you accurate pricing strategies based on sold properties like yours. Don't price based on active properties. Active simply means, up to this point, the seller has been unsuccessful. In closing, find what works from someone who has made it work or is working with someone who has made it work. Remember, Ben Roethlisberger didn't ask any reporters what plays to run.